ACCESS DENIED error in filemon may refer to this file: C:\WINDOWS\system32\dsierror.log, or the file that was locked by dsmcsvc.exe may be described as C:\Program Files\Tivoli\TSM\baclient\dsierror.log.
On occasion the environment variables are not set by Tivoli's TSM Client install and then SQL Server. If SQLLiteSpeed does not have those environment variables set, the TSM dsmSetup method call fails.
1. The best would be to create an environment variable called DSMI_LOG and give it the value C:\Program
Files\Tivoli\TSM\baclient. A reboot is required in order for the environment variable to take effect.
2. Pass in @tsmdsmi_log = 'C:\Program Files\Tivoli\TSM\baclient' to their backup script, which will tell LiteSpeed where the log file is.
Create the environment variable now, and just use @tsmdsmi_log as a workaround until the reboot.
Waiting for fix in a future release of LiteSpeed for SQL Server.