cfrun not working, public key is on client

[PAUL WILLIAMSON]

Like the subject says...

I'm attempting to run cfrun on the policy master to one 
of the clients.  I get the following:

root@host1:/var/cfengine/inputs# cfrun
cfrun(0):         .......... [ Hailing 10.0.1.1 ] ..........
 Host authentication failed. Did you forget the domain name or 
IP/DNS address registration (for ipv4 or ipv6)?cfrun(0):         
.......... [ Hailing 10.0.1.1 ] ..........
WARNING - You do not have a public key from host 10.0.1.2 = 10.0.1.2
          Do you want to accept one on trust? (yes/no)

--> yes
cfrun:host2.mandtbank.com: BAD: key could not be accepted on trust
cfrun:host2.mandtbank.com: Key-authentication for host2.mandtbank.com
failed

The details (or at least what I think is important...)

I have a public key from 10.0.1.2 (the policy master) in the 
/var/cfengine/ppkeys directory.
I have a public key from 10.0.1.1 (the only client listed in
cfrun.hosts) 
in the policy master /var/cfengine/ppkeys directory.

I am able to run cfagent from host1, I have cfservd running on host1.
All this should allow host2 (the policy master) to execute cfrun to 
kick off cfagent on host1 remotely.

What did I do wrong?

Thanks,
Paul