Wow, I doubt your PW would be able to handle that amount of splittings if it actually needs that. If you get it working keep any eye on your server and pw database health, the default limits are there for a reason.
As to why it might not be in effect, did you restart the server? dtserver.ini changes only go into effect after restart.
Edit: misread the question - still would double check a restart in case the value was different from the default. Otherwise, I'd just check the Server.0.X.log file to see if there's more details. The message in the client might be more generic than what you see there.