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Check daemon picld.
Try restart it. ( /etc/init.d/*picl* )
After restarting daemon picl inside /etc/init.d directory, still prtdiag is not working
If i recall all the picl/prtdiag cases i had when i worked at sun, they both came down to the following two reasons:
1. system with ancient patches
2. system with no patches
.. so i think its a good idea to start by verifying that you are up-to-date on patches. And verify that relevant processes are running..