The first step of the job is to deloy system configuration and it fails here with the above error.

ok ... if I boot the server using bootable ISO then it should be able to connect to DS but how do I tell it to run a job ,ie  , I want to install the windows 2003 together with PSP on this server in one go... how do I go about doing this . Which job should I drag and drop ?

Have a look at http://h18013.www1.hp.com/products/servers/management/rdp/knowledgebase/20000003.html and see if this can help you.

Does the Aclient even start?

yes the aclient starts ..I had a look at the link but that doesnt seem applicable .

What is your Primary lookup key set to? Look in Tools > Options > Global

Is it by any chance set to MAC Address and nothing else? If this is the case then my second question is: Do you have a NIC team on the server that you want to run the job on? Because if this is the case you have a virtual MAC on the team and that MAC doesn't exist when you PXE boot. So you could turn on Serial number as a primary lookup key as well.

It's possible that the job is looking for a specific Automation OS.  Check the job that you have scheduled to be sure it isn't looking for an incorrect version of WinPE or Linux or DOS.  Also, if it is set to Auto, change it to the Automation environment you are looking for (i.e. if this is a 64 bit machines, change it to WinPE x64 Auto, if you want WinPE 32 bit, change it to WinPE Auto...etc.).  This may help your situation.