Recent versions of SQL Server do not provide OSQL.EXE in their set of files when the Client Tools are installed.
The OSQL.EXE file is installed on the full SQL Server installation, the one holding the Database Management System itself.
So, there is already a computer with OSQL installed: the SQL Server computer hosting the mdb the domain manager connects to.
In order to workaround the situations the following steps should be executed:
From the computer holding the full SQL Server installation you might be able to copy just the following two files to the remote engine server (place them in the same directory) and have it work:
C:\Program Files\Microsoft SQL Server\110\Tools\Binn\OSQL.EXE
C:\Program Files\Microsoft SQL Server\110\Tools\Binn\Resources\1033\osql.rll
This should solve the problem and the remote engine setup procedure should normally continue.