We have tested the Add On Directory facility on GroupWise client 7.0.2 (build date: 06/04/07) and unable to re-produce the behaviour you have described.
Please make sure the addon.cfg file is valid. See the Distribution Kit documentation (http://www.advansyscorp.com/formativ/formativ%20distribution%20kit.chm) for more information. To isolate the problem, I will suggest you to install the GroupWise client then install Formativ Runtime in a test machice.
Look forward to hear from you. Please let us know if you have any questions.