That tackles the top items on my list, and a small bit of investigation with "strings -a", "strace" and "grep" has proven to me that the error message is coming from in.tftp, and not from xinetd. (A possibility, as the /etc/xinetd.d/tftpd entry is being used to start the server. It's odd that I didn't find a "getgid() call in the output from strace. At this time, I'd go for a quick read of the source.
nobody:x:99:99:Nobody:/:/sbin/nologin
'nobody' entry from /etc/group: nobody:x:99:
Also, I have not modfied the group or passwd file since installing RH 9.0...Same thing happens on RH8.