There is a possible firewall conflict if you can see the client, but can not add it. To fix this, goto the Control Panels and choose the "Sharing" control panel, then click on "Firewall". If the firewall is on, you need to add another port. Choose "Retrospect" from the pull down menu. It should add access to TCP port 497.
Its voodoo. It certainly has nothing to do with bad hardware, so don't let them talk you into sending in your drive for service. Its a bug in Retrospect. You can read about it in the forums in my thread.