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Check in /usr/tmp/observiced.log on the admin and the client to see if there are any clues. Check the time is in sync on both as that often can cause this issue.
date is in synch...
client observiced log file:
2012/01/03.15:11:51 Received request from supported client version 100300 for component obtool from host UUID=5a764f22-310e-102e-b8d9-dfce1af60819
admin server observiced log file:
2012/01/03.15:41:43 Received request from supported client version 100300 for component observiced from host hostname
2012/01/03.15:41:43 host hostname failed trust checks, component observiced on fd 8 - identity of host is suspect (OSB network security manager)
No more info....(the fd value changes, sometimes its 8,9 or 10)
I would say your client has problems checking its own hostname, and is "hostname" the actual system name? What OS is the admin server and client? Check the IP address matches what is configured for the host entry especially if your client has multiple IPs.