Hello,
I don't know about Windows 10, but maybe this helps a little bit:
PSM will try to discover LM using an UDP broadcast. This can only work if the two machines are on the same subnet, and (unintuitively) it will not work if PSM and LM are running on the same machine.
If the UDP process fails the official workaround is to specify LM's address and TCP port in an .ini file, as described in the LM documentation. Unfortunately this is not an easy task. The port number you need is not the port number that is displayed in the GUI of LM, and it will change whenever LM is restarted. You would need to use a utility like netstat to determine which TCP port LM is listening on.
That said, we are aware of an issue in the UDP process that can occur when the PSM machine has multiple network adapters (physical or virtual). Certain operating systems (perhaps depending on their configuration) seem to trigger the issue while others don't. It will likely take a while before we can publish a fix (which will hopefully include other improvements) as we're currently close to the release of a different product, but I'll post more info here when I have it.