Mathematica generates this error when the published name of the server machine is not visible across the network.
You can resolve this by fixing the network so machines can be found by name, or setting ContactURL in the Server Settings page to the IP address of the server. The Server Settings page is located at http://localhost:3737/WolframLightweightGrid/ServerSettings.
An example ContactURL setting for a server running on a machine with the IP number 126.96.36.199 is http://188.8.131.52:3737/WolframLightweightGrid. You must restart the server for the changes to take effect.