Your version of flame may be too old to support the creation of clips. The IFFFS Wiretap server version must read 1.7 or greater to support clip creation. run wiretap_server_dump (from the SDK) on your machine to see the versions of all servers.
The wiretap_client_tool would have done the same thing if pointed to a server.
From the oputput, I can see that the server version (1.1) is too old. In fact, I believe you qualify for a free upgrade to the next version ... which is significantly more stable. We don't even test against this version anymore since the upgrade is free.
You would need to upgrade Smoke/Flame .. which comes with the updated server.
To clarify my original comment regarding the free upgrade, it's only free for customers with support contracts. Alternatively, you could sign onto ADN and get updated development versions (watermarked) with access to beta releases as
If you're going to do any serious Wiretap work, I highly recommend the upgrade.