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server 2003 Terminal Server Shadowing problem

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We are having an issue Shadowing users in our Server 2003 Terminal Service environment. We have built 3 new 2003 Terminal servers for deployment. The Server OS is licensed Per Device\Per User. Terminal Services is installed and configured as follows:

Licensing: Per Device

Permission Compatibility: Full Security

Restrict to one session: No

License server Discovery mode: Automatic.

The Terminal servers see the 2012 license server just fine

All users can connect to the new Terminal Servers and launch applications just fine. The issue is shadowing the users. When trying to Shadow a user we get the following error:

Session Remote control failed (Error 7054 - The system has reached its licensed logon limit. Please try again later.)

Per several different articles on we have tried all the following;

1. License Logging Service is disabled

2. Remove the server from the domain, then add it back.

3. Checked DNS, Flushed DNS, etc. DNS works fine, no errors by PING, NSLOOKUP, etc.

4. We have built brand new Physical and Virtual boxes, Fully patched them, and installed Terminal services only. When we try to shadow on the new Terminal Servers, we run into this issue. All of our other 80 Terminal Servers are running just fine and Shadowing works.

5. Remote Control in AD and on the Terminal Server is enabled and configured (does not require users permission and can interact with the session)

6. Made sure screen resolution on both sides of shadowing was the same

We noticed the issue after we decommissionedour 2003 Enterprise License server and installed a 2012 Enterprise License server. The new 2003 Terminal servers we are trying to install have this shadowing issue but the ones built before we removed the 2003 License server do not have this issue.

We can however, shadow these new 2003 Terminal Servers from any 2008 or 2012 server...

We are convinced this is an issue with our 2012 License server but are unsure where to start. Any help or pointers here would be greatly appreciated.


Russ


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