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Search the knowledgebase for "Manual delete vault". In all likelihood you have information in the registry that is corrupting the installation. When I had this problem on a client (Vista 32) removing HKCU\Software\SolidWorks\Applications\PDMWorks Enterprise (the entire folder) in the registry fixed it.
Also note that if any of the clients are 64bit then all clients and servers need to be installed using the 64 bit installation or upgraded if already installed. This is only for PDMWE 2007 as PDMWE 2008 has only the 1 installation set.
To solve the problem I had to uninstall the Client delete the registry keys and reinstall the 64 bit verision of the client plus install the prerequisites for the SQLServer2005 (SQL backwards compatibility).
Note all this could have been avoided if the 32bit installer came up with a warning that it was being installed on a 64bit system. Or if the installer was intelligent enough to switch to installing the 64bit version.
OK this seems potentially similar to the problem I just posted about in a new subject however I have xp pro 64 bit... can someone explain this to me in simpletons terms? Does this mean I should uninstall PDM from my workstation, then go and delete those registry files and install PDM again? How do I know what to use or determine the difference between 32 bit installation vs 64 bit installation. My CD simply says PDM Works Enterprise 2007 on the CD... I have gone around and around with the VAR for over a week, I need to understand a solution to this headache.
Does this also mean I need to go around to all our user's machines and reinstall PDM some other way? This is terribly confusing for a non-IT person and when we first got PDM, the VAR rep (who of course is long gone) just kind of did it and said once it's done I wouldn't have to worry about it.