I would get ride of the variables to start with to make sure it is not the issue. You can always add them back in later once you have it working. Variables in LANDesk are also case sensitive and will not do anything if you dont reference them.
Do you have your image storage location (LDCore as per your screenshot)setup as a preferred server? This is how the deploy image action is able to connect to this location using the credentials you specify in the preferred server settings
Try choosing Other instead of imagex in your Deploy template and leave the 2 type in the same as you have it now.
I took out the two variables, but it didn't seem to help. The storage location "LDCore" would be our primary LD server. We aren't replicating any content to other servers (only just have the one for LD). Do I still need to set it up as a preffered server? If so, is there any danger in doing this and how do I properly set it up?
Setting up the core server as a preffered server did the trick. I read in this discussion that its possible to do. I just added the core server using a dummy IP range (22.214.171.124 to 126.96.36.199) as mentioned in the discussion.
Just to note for others running into the same: I did enter in some read-ony credentials when setting it up, which I know for sure have access to the core shares. But when I clicked the Test Credentials, it would fail for both UNC and HTTP. However, the deploy image action still seems to work (weird). I'm guessing as long as its listed as a preffered server, then it works??
Also: I did not setup any of the other settings for the core/preferred server (Selected Replicator, Sources, or Write Credentials)