There's a little mini-updater for the DOS and Windows clients in case the console encounters an old version in the middle of a task (for instance, in a fixed Ghost Boot Partition). The file in the console install directory UPDATE.EXE is a self-extracting zipfile that contains just the minimum DOS and Windows client files.

If the console thinks that the clients are the wrong version, it sends this first (after this, for Windows it will then try sending the Client.MSI full installer) and runs it. For some reason it seems to be that the file has gone missing.

What version of GSS do you have installed on the server?

It was originally GSS1.1. I updated to 2.0 and then applied the 2.0.1 live update patch.

Updating the client failed on a large number of my clients, but it also worked on others. Could this be related?

To be honest I'm stumped on why this has happened for you. However, the main thing is to get you the UPDATE.EXE file back into its place. Probably the simplest way for you to do that is to use the 2.0.1 server installer on another machine to install a temporary copy of the code and grab the UPDATE.EXE file from that and move it into your server with the problem (or you could extract the file from the install CABs, but MSI tends to give files in the .CAB funky names so it's often just easier to install to find them).