Looks like some configuration issue. If you have any other kind of environment just compare the TSM files.
0406 S DSM_RC_NO_OPT_FILE
Explanation: The options file specified by file-name cannot be found.
System Action: The TSM client ends.
User Response: See if you have the environment variable DSM_CONFIG (or DSMI_CONFIG for the API) set, which explicitly identifies the TSM options file. ( You can do this by entering the SET command at your system.) If this environment variable is set, ensure the file indicated by the variable exists. If it is not set, then TSM looks for the file dsm.opt in the current directory. If neither of these cases is met, you receive this error message.