does line 16 of your script correspond to this line?
Set objSMS= objLoc.ConnectServer(strSMSServer, "root\sms", strUsername, strPassword)

make sure you updated the variables earlier int he script, where you set strSMSServer, strUserName, strPassword, intResourceID, etc...

make sure that you can ping your site (should be where the sms provider is located) from the client.

Greg,

Thanks for the quick reply, here is more info...

This is the line:
Set objSMS = objLoc.ConnectServer(Loc.Machine, "root\sms\site_" & _
Loc.SiteCode, strUserName, strPassword)

The variables are set as below:
strSMSServer = "10.32.71.225" 'The server name of the site server
strVarName = "TestRebootStepCollVar" 'the variable name to create
strVarValue = "200" 'the variable value
intMask = 0 ' set to 0 to NOT mask the variable value
intResourceID = 701 'the resourceID of the client to modify. To find the ResourceID, right-click on the computer object,
'and select Properties fromt he ConfigMgr Admin Console.
strUserName = "gblappqa\BranchTest" 'domain/username of the account
strPassword = "Pa$word" 'password of the account

Also, not only can I ping the configmgr server from the client, these are the same credentials I use to map a drive to the configmgr server to copy over the smsts.log to view the error.

not sure if it will make a difference, but try to use the sms server netbios name instead of the IP address..

Yes, we tried netbios names in the beginning and switched to ip address for troubleshooting.

hm - that's a tough one. . .
Is the ConfigMgr Site, ConfigMgr (SMS) provider, and SQL database all on the same site? the server name you enter should be the sms provider, which is normally on the site server.
for troubleshooting, you may want to hard code information into this line. . and maybe even reove the line continuation. . so for example of my site server is "myLABServer" and my site code is "LAB", it would look like this:

Set objSMS = objLoc.ConnectServer("myLABServer", "root\sms\site_LAB", "mydomain\myusername", "MYPass")

make sure this username/password has rights to configmgr, not just the ability to map a drive.

Ok, hardcoded the information as you suggested on a single line and get a new error.

Creating computer settings object
D:\Testit.vbs(38, 1) SWbemObjectEx: Generic failure

This refers to the line below:

If settings.Count = 0 Then
Wscript.Echo "Creating computer settings object"
Set computerSettings = connection.Get("SMS_MachineSettings").SpawnInstance_
computerSettings.ResourceID = computerId
computerSettings.SourceSite = siteCode
computerSettings.LocaleID = 1033
computerSettings.Put_ <<
End If

ok - if it's failing there, it could be a few things:
1 - the other variables need updated (comptuerID should be the ResourceID for the system to modify, and SiteCode should be the site code of the site server . . . if I recall)
2 - the account you're using does not have proper rights to modify machine variables. to check this, I would launch the admin console using that user's rights, and see if you can manually modify a machine variable.

The only way I can get the RebootStep variable to work is to follow the steps in the Troubleshooting DDP - RebootStep ( http://www.delltechcenter.com/page/Troubleshooting+DDP+-+RebootStep) and then in addition to the steps listed, I must make the lowrightsuser a member of the local administrators group.

I have tried using the CreateTSVariable.vbs script and get the same results. What am I missing? Using the script is pretty telling. I mean if I omit the step of putting the lowrightsuser account in the local administrators group, I get CreateTSVariable(12, 1) SWbemLocator: Access is denied.

Anyone have any ideas?

I am wondering if this is a Windows Server 2008 issue. My SCCM 2007 site server is runing on W2K8 server. I put the lowrights use in the smsadmins group and the Remote Desktop Users group and then made the changes to ConfigMgr user rights. When I log on as the lowrights user, he cannot run the ConfigMgr console. That account gets access denied..

Any ideas?

when you're running the createtsvariable.vbs, are you running it local to the site server? If so, try running it from a remote system to see if you have the same results.