ltsp-launch-client lacks everything necessary to allow local devices (CD, floppy, USB stick) to work automatically with ltspfs. ltsp-trunk/client/initscripts used by Debian/Ubuntu contains some stuff that we currently don't appear to do that might be necessary.
Apparently the xauth fix broke local devices support even upstream. This means local devices currently do not work if you are using the non-default option LDM_DIRECTX=true in your lts.conf.
Changing version to '9' as part of upcoming Fedora 9 GA. More information and reason for this action is here: http://fedoraproject.org/wiki/BugZappers/HouseKeeping
This was fixed before Fedora 9 release.