I have a workstation with two Intel Xeon processors (28 physical cores/56 logical cores) and I have the same problem with DSM/DTM generation.
Generating Point Cloud (phase 2)...
Start Time: Monday, January 8, 2024 9:02:54 PM
Distributing operation across 28 parallel instances.
ERROR 999999: Something unexpected caused the tool to fail. Contact Esri Technical Support (http://esriurl.com/support) to Report a Bug, and refer to the error help for potential solutions or workarounds.
Failed to execute command. [GenerateDSM.exe]
Failed to execute (GeneratePointCloud).
Failed at Monday, January 8, 2024 9:05:32 PM (Elapsed Time: 2 minutes 38 seconds)
On another machine with one processor or the same machine when I limited in BIOS numbers of cores on each processors to ex. 8 (16 physical cores), everything is OK . DSM and DTM products are generated.