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There's no requirement to have ePO in a domain, but it makes certain operations like pushing agents slightly easier. Generally speaking though it's not essential, although I would imagine the majority of users do have the server in a domain.
The "agents communciating to server" issue is unlikely to be anything to do with the server not being in a domain - agent to server comms don't use any form of Windows authentication, so that's almost certainly not the cause.
You don't have to be a domain member to push agents, but it makes things easier, especially if you're pushing across domains (as long as the domains have a trust relationship in place, of course.)
Thank you for the prompt response. I'm hoping if I add the server to the domain, it will help in pushing agents from the server. My client prefers this approach to agent installation instead of using SCCM or login script.
Please be aware though that it's not a guarantee of success - there are a lot of things that can cause push installs to fail - but it will make life easier.