Group policy is set up to prevent users from using saved credentials, works fine when connecting to the RDP via IP address or FQDN. But connecting in through just the hostname allows a user to save their credentials. How can I address this, we do not want ANY saved credentials.
You most likely have a .rdp file with saved credentials for that particular host. If an .rdp file already exists with saved credentials, it'll continue allowing you to use them. Look in the user's Documents folder and see if you can find the file. Deleting it should fix the problem.