Backup Policy - Unable to delete or do anything with it

We are having all kinds of problems when we switched from TrueImage Workstation 9.1 to Backup and Recovery 10 Update 3 Build 10.0.12703.

Let me first give the setup.

All workstations are running Windows XP SP3 with the exact same 2 Disk drive system where Disk 1 is being imaged to Disk 2.
One workstation has the License Server, Mangement Server, Management Console, and Agent.
All other workstations have only the agent which reports back to Management Server. Agents were installed at the desktop and linked back to Mangement Server.

After installing everything I proceeded to create a single Backup Policy with the full backup scheduled to run once a month and then incremental scheduled to run weekdays.

I then applied the policy to all of the physical machines and went ahead and forced the first full backup since the first sunday had already passed. So at this point all computers had a full image.

At this point all should be good, but 2 days later I realized only a couple actually did the incremental and the others were showing various cryptic errors.

All research pointed to nothing with the errors so I decided I would simply delete the Backup Policy and start over again. Unfortunately it would not allow the backup policy to be deleted and gave the following error:
<<
---------------------------------------------------------------------
Error
---------------------------------------------------------------------
Failed to remove the backup policy.
---------------------------------------------------------------------
Details
Code: 10,223,619(0x9C0003)
LineInfo: 0x7E90832CFF02929C;

Module: C:\Program Files\Acronis\AMS\ManagementServer.exe
Message: SERIALIZER_ERROR_NO_META_INFO

---------------------------------------------------------------------
>>

So I went ahead and create a new backup policy and assigned to all the computers. A day later I see that the policy either didn't assign to several computers OR a computer still had tasks from both policies assigned.

I have also found the units are running out of memory. They all have 1GB and they have normally never went past 850MB of used RAM with TrueImage Workstation 9.1.

Here are some other random errors:
<<
Task 'Incremental backup' failed: 'Failed to process the request.
Additional info:
--------------------
Error code: 1
Module: 173
LineInfo: f0cca54483be1f07
Fields:
Message: Failed to process the request.
--------------------
Error code: 3
Module: 174
LineInfo: 4a62d31a8b629362
Fields:
Message: Error: An underlying layer has disconnected from the peer.
--------------------'.
>>

And I am also seeing this error:

<<
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Log Entry Details
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Type: Error
Date and time: 1/14/2011 12:32:10 AM
Backup plan: [None]
Task: [None]
Managed entity type: [None]
Managed entity: [None]
Machine: Steve.mpscustomfab.com
Code: 8,326,693(0x7F0E25)
Module: 127
Owner:
Message:
The statement has been terminated.
Additional info:
--------------------
Error code: 3621
Module: 127
LineInfo: c131f5921ff772de
Fields:
Message: The statement has been terminated.
--------------------
Error code: 2627
Module: 127
LineInfo: c131f5921ff772de
Fields:
Message: Violation of PRIMARY KEY constraint 'PK_Instance'. Cannot insert duplicate key in object 'dbo.Instance'.
--------------------
Acronis Knowledge Base: http://kb.acronis.com/errorcode/

Event code: 0x007F0E25+0x007F0A43

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

>>

Since I cannot delete the original backup policy I am thinking there is some sort of corruption in the underlying database.

I only have 8 units and I am starting to think I should just install each one individual with just the Backup and Recovery and not use any management server if this is the experience I am going to have.

So the questions are...

1) What do all these errors mean.
2) How do I delete the backup policy and not get the error.
3) Is there a way to have the managment server and license server running on a real server and not on a workstation. I tried doing this originally, but it would not install on the server... I can't remember the message, but it would not let me. The server already had the server version installed.

At this point I am a bit embarressed I suggest the customer upgrade so I would appreciate any help to get the mud off of my face!

Thanks,
Greg