Editing the file /usr/share/ltsp/screen-session.d/XS00-setvars by changing the line
XCONF=/var/run/ltsp-xorg.conf
to
XCONF=var/run/ltsp-xorg.conf
allows kiosk mode to work. I don't know what this workaround does in all use cases, and I wouldn't be surprised if it ends up breaking something. Hopefully someone who knows more about the inner workings of LTSP can comment.
Reporting a workaround for Ubuntu 14.04.1 LTS:
Editing the file /usr/share/ ltsp/screen- session. d/XS00- setvars by changing the line
XCONF= /var/run/ ltsp-xorg. conf
to
XCONF= var/run/ ltsp-xorg. conf
allows kiosk mode to work. I don't know what this workaround does in all use cases, and I wouldn't be surprised if it ends up breaking something. Hopefully someone who knows more about the inner workings of LTSP can comment.