Peter,

At the client, open the registry-editor and find the ADSM keys.
In those keys there's a path to the dsmsrvc.exe. This would look like
c:\program files\ibm\adsm\baclient\dsmsrvc.exe.
The path will not be found because of the space in program file. This is a
setting somewhere else in the registry, regarding long filename support.
Just change "program files" to "progra~1" and all should work fine.

Good Luck