License Manager issues with 10.0

All,

I have the License Manager installed on our SBS 2011 server.
For testing purposes, I have switched of the Microsoft Firewall to make sure this is not the cause of the problem.

License Manager is running as it shows as RUNNING in the License Manager Administrator.
But when I select the Diagnostics option and do a diagnose. It comes back as NOT RUNNING.

Also when I try to connect from a Client Machine to the License Manager, I get "SERVERNAME" is an invalid hostname. Please enter a valid hostname.

As stated, no Firewalls are enabled.
Does anybody have an idea?

Raoul.