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I am having an issue with a Win7 machine rdping into a windows server 2008 std TS server. I get the following error in the event log when I try logging in.

Event ID 1004 The terminal server cannot issue a client license. It was unable to issue the license due to a changed (mismatched) client license, insufficient memory, or an internal error. Further details for this problem may have been reported at the client's computer.

I found a Microsoft KB on it. I checked all the recommendations and it seems the only thing that could be an issue is if the self signed cert is corrupt. Is there a way to check that? Right now this isthe only computer that is having issues connecting.

I did run a license report on the server and I found it showing 17 used licenses. Which 4 are Domain Administrator accounts. Judging by the report showing those accounts, I'm assuming those 4 accounts get counted against your total license useage on a per user bases? If I need to upgrade the number of licenses per user licenses, I will need to include the number based on administrator accounts that login? Or am I looking at this correctly?

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I am in the process of setting up our 2008 Remote Desktop Services Servers, formally Terminal Server Services. One thing I did see on our licensing is that we may have some new CALs coming in for the 2008 implementation vs our previous 2003. Are you using your TS CALs vs your RDS CALs? Are they interchangeable or are they different? – Chadddada Jun 14 '11 at 19:25
up vote 1 down vote accepted

Looking back at this, there was a lot going on with the server. I was looking at the licensing thinking that could have been causing it, but the GPO printer deployment was causing the winlogon process to hang, after about 5 minutes of sitting there, the user would close out of the RDP, try to reconnect and have the issue reported.

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