Well I figured out how to make it work. I read a post that suggested that the license count is based on all the computers in your catalog not just the computers with agent. So I deleted some of the computers from the catalog that were no longer in service. I also renewed my license file and up the number of licenses. Rebooted the client machine that I was testing on and it works. So it seems that I was hitting a license limit although there was not indication of that. Hope this helps.