Today I decommisoned my old DHCP server and moved it to the new Windows 2008 R2 server and re-configured all the scopes and correctly configured my scope options as required but then I found out that even though the DHCP server was "Authorized" and the scopes were "Activated" it wasnt able to lease out any IP Addresses. I restarted the DHCP Server service but still no luck!
In the event viewer I saw a couple of error events but one thing stood out
"DHCP Server is unable to bind to UDP port number 67 as it is used by another application. This port must be made available to DHCP Server to start servicing the clients"
So in order to find out what application was using port 67.. I did a NETSTAT -a -n -o and found out that PORT 67 was being used by the PID 4532. I had no idea what that PID was so I checked my Task Manager and then went to Services tab and identified that the PID 4532 belongs to the "Windows Deployment Service".
So at some point someone must have configured WDS on this server and now when I was trying to use DHCP it wasnt able to service the clients on port 67 since it was being used by WDS. So I stopped the WDS service and then re-authorized by DHCP and sure enough all started working!!