I've seen this error under the following conditions:
1) The client is not at the same version/Service Pack as the server
2) The client was installed using an admin image and the SQL Server SQL_DMO Client Components were not installed. See pg 3-18 of the Installation Guide.
Error : Unspecified database error (SQLDMO) on the Archive Server.
Root cause :
SQL Server Database Management Objects (SQL-DMO) has been removed from SQL Server 2008 R2 Express and the SQL Server 2008 R2 Feature Pack. SQL-DMO also does not support Database Engine features introduced after SQL Server 2000.
We recommend that you modify applications that currently use this feature as soon as possible.
If you must support SQL-DMO, install the Backward Compatibility Components from the SQL Server 2008 Feature Pack from the Microsoft Download Center.
Download and install Microsoft SQL Server 2005 Backward Compatibility Components.