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Client cache is empty after software distribution using SCCM 2007

I am trying to distribute software through SCCM 2007 R3 running on Windows Server 2008 std. My environment is in mixed mode. I have both Win 7 (64bit) and Windows XP (32bit).I have created a package and distributed to DP plus advertisements. A while ago, the system informed me at the client that new software was available for installation. When you click to install, it takes a while and then generated the error that it cannot run the program as the software cannot be located. Indeed, the folder was created at the client but it was empty. I have defined boundaries using IP address ranges. As of today, it looks like no communication is going through to the client. The contenttransfermanger.log and CAS.log were last updated yesterday despite doing a mandatory advertisement today. What could I be missing out? See attached logs.
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Make sure the client has whatever account your using to push and run the package as admin on the machine or verify your group policy is successfully being applied to those clients.
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The package runs under the local system of the machine, therefore it has full admin privileges.
One of the test machines is in a special OU without group policies and still experiences the same symptom.
Could there be something wrong with the agent on that client? It's not giving a heartbeat to the server?
The heartbeat discovery is set up to run every Friday at 1:00 PM only. Would this be a problem?
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We solved the problem following a hint that we found on another forum. The EE comments did not lead us to the solution.