That log indicates that you're not running the latest version of the Deployment Agent:
Deployment Agent version 2.4.8.34
You would normally be able to automatically update the agents from the Deployment Manager web interface, but unfortunately that doesn't work when the Agent service isn't running. Instead, you'll need to perform a manual upgrade of the agent. You can simply get the agent installer .msi from the Tools page of your own Deployment Manager server (http://{your_deployment_manager_server_address}:{port}/downloads/agentinstaller) and run it on the machine in question.
Upgrading the Agent to 2.4.12.1 should fix the problem.
And changing permissions on the c:\document and settings\all users\application data\Microsoft\crypto\rsa\machinekeys solved the problem - without changing the permssions it still failed.
But in all fairness I've also 2003 x86 where it works without changing anything so it might be some quirky thing in an old installation.
Comments
Upgrading the Agent to 2.4.12.1 should fix the problem.
Redgate Software
And changing permissions on the c:\document and settings\all users\application data\Microsoft\crypto\rsa\machinekeys solved the problem - without changing the permssions it still failed.
But in all fairness I've also 2003 x86 where it works without changing anything so it might be some quirky thing in an old installation.
The important part is that it's working now.