The Diagnostic Tool does not support LCPDFR 1.0, however follow these steps and you should be able to get the mod working.
Step 1: Perform a Clean Install of GTA IV (Legal Copy)
Step 2: Do an automatic installation of the LCPDFR 1.0 mod.
Step 3: Install other mods you want.
Step 4: With the LCPDFR automatic installation it sets the asi loader to xlive, which means you need to run GTA IV as administrator and offline when the login box opens.
I followed these steps exactly and LCPDFR 1.0 works perfectly with my system. I hope it works for anyone else who had the same initial issues that I had.