If you select image type of other, you do have to specify the path to imagex. If you do not modify the upgraded template it should continue to work. Once you edit it however, you have to change the imagex action. If you review the deployimagehandler.log on the client it will give you more insight to why this is failing.
Also, you should not have the agent installed. At this point in provisioning you are not in the OS anyways, so the installed agent doesn't apply.
Did you update your pxe reps?