Tested on Windows Server 2025 (24H2, build 26100.33296)

A machine boots, gets a 169.254.x.x address, and has no network. The DHCP server is up. The service is running. There are no errors in the event log. There are free addresses in the scope. Reboot the client and it works fine.

I first saw this on Windows Server 2003. I assumed it had been fixed somewhere along the way. It has not — because it was never a bug. It is a default, and the default is still there in Windows Server 2025.

What the RFC actually says

RFC 2131 splits address-conflict checking across both ends of the conversation: