Project Site creation works from Project Center, fails from MS Project

Project Server 2010 - using a custom site template, if I create a new project from PWA in the project center, everything works, the project site is created. If I create a new project starting in MS Project, I am getting an error and the site is not created. I have looked at both the ULS logs and event logs and I don't see (or understand) what the error is telling me other than that it is not working.

Here are error details:

Error ID: 16400
 Error ID: 26000

Detailed error below - send it to the administrator for more detailed troubleshooting.

<?xml version="1.0" encoding="utf-16"?>
<errinfo>
  <general>
    <class name="CreateWssSiteContent: Creating project site failed! Project Uid=97cc948f-3e73-4076-a8bf-581689330aa6, site URL=http://projectserver.com/jutest, site name=jutest. CreateSPWeb: Creating of webhttp://projectserver.com/jutest failed. Wss reported error System.ArgumentException: File or arguments not valid for site template _{E1BD492E-AE53-4CA3-B968-424B835B1D25}#DCP_ENG_Tmplt_.&#xD;&#xA;Parameter name: WebTemplate&#xD;&#xA;   at Microsoft.SharePoint.SPWebTemplateCollection.get_Item(String strKey)&#xD;&#xA;   at Microsoft.SharePoint.SPWeb.ApplyWebTemplate(String strWebTemplate)&#xD;&#xA;   at Microsoft.SharePoint.SPSite.CreateWeb(String strUrl, String strTitle, String strDescription, UInt32 nLCID, String strWebTemplate, Boolean bCreateUniqueSubweb, Boolean bConvertIfThere, Guid webId, Guid rootFolderId, Boolean createSystemCatalogs)&#xD;&#xA;   at Microsoft.SharePoint.SPSite.SPWebCollectionProvider.CreateWeb(String strWebUrl, String strTitle, String strDescription, UInt32 nLCID, String strWebTemplate, Boolean bCreateUniqueSubweb, Boolean bConvertIfThere)&#xD;&#xA;   at Microsoft.SharePoint.SPWebCollection.Add(String strWebUrl, String strTitle, String strDescription, UInt32 nLCID, String strWebTemplate, Boolean useUniquePermissions, Boolean bConvertIfThere)&#xD;&#xA;   at Microsoft.Office.Project.Server.BusinessLayer.Admin.CreateSPWeb(SPSite topSite, String spWebUrl, String spWebName, String spWebDescription, String spWebLogoUrl, Int32 webTemplateLCID, String webTemplateName, String&amp; errorMessage). Inner exception: [null]">
      <error id="16400" name="WSSCreateSiteFailure" uid="55138f1b-9590-4a49-9cff-2caeaaae5cc4" projectUID="97cc948f-3e73-4076-a8bf-581689330aa6" workspaceUrl="http://projectserver.com/jutest/jutest" projectWorkspaceName="jutest" />

I see "File or Arguments not valid for site template" but if that is true, why does it work from PWA?

Any help would be appreciated. Thanks.

Jeff