Unable to create a NetBoot image on Sierra
I have the same problem using the imagetool command or the System Image Utility app on macOS Sierra.

As a semi-solution (workaround?), you could follow the steps on this web page that shows how to create a NetBoot image (.nbi) using the Install Sierra.app as source. I was able to create a "plain" NetBoot image with these steps. I assume you could also customize stuff using additional Installer packages and post-install scripts.

I'm still looking for a (free-style, good-old) way to create a NetBoot image from a custom bootable macOS Sierra partition though.