Here are the answers to your questions, hope it can shed some light on thsi issue.
Vikram - It has the correct server name and the correct group. It is also shown in the SEPM remote console, but without the green dot. It does not indicate wither offline or self-managed.
iofractal - The only warnings displayed are asking if SEP and SEPM are the latest versions.
Scuba Steve - I do have an instance of Smc.exe running according to task manager. The server is a VM on a vShpere 4 host and I installed SEPM and SEP through the VMWare console.
Thanks again.