John,

Your optionset may be what is preventing the backup from
occurring.  Include/exclude statements in an option set are "appended" to
the options in the dsm.opt file when the backup occurs.
Since include/excludes are processed "bottom-up, first match" those in an
optionset can easily override those in the dsm.opt file.  The clientoption:

          Option: INCLEXCL
Sequence number: 1
        Override: Yes
    Option Value: exclude *:\...\*

matches anything that is not under any *document*, personal or profiles
directories before it gets to the
      include Z:\...\*
option in the dsm.opt file.

You might want to move the "exclude *:\...\*" option to the client's option
file, above the "include Z:\...\*" option.


Ted

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