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SBS 2003 Passwords, GPO, and licensing

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7.0
I have a Small Business Server (SBS) 2003, along with a regular server 2003 Enterprise Edition.  The regular 2003 server is used as a Terminal server, but it also a domain controller.  Licensing is all done on the the SBS server, along with Exchange, files sharing, printer sharing, antivirus (TrendMicro SMB), etc.    

I am seeing an occational problem where users are refused rigths to their network drive.  This happens seemingly at random and only for a short time - less than 5 minutes.  The Internet access stays up, so it does not seem to be a network/firewall/switch problem.  Here are some other issues I have noticed, which I hope will solve this main problem:

When I look at administrative Tools -> Licensing, it tells me Installed Licenses are 35 and Max Usage is 7.  There are at least 25 people logged in and running.  Earlier today, the Max Usage was 40 with about 15 people logged in.  (It would be nice if there was a place where the total number of logged-on users was displayed.)  I do get warning messages near the end of the day telling me that I am nearing the maximum number of per-server licenses - but no messages saying that I have hit or exceeded the limit.  Could idle users get kicked off to allow for new logon requests?  Wouldn't there be a message or Event saying that the maximum license had been reached?

Password policies do not seem to take effect.  In the Default Domain Security Settings, I have set passwords to: PW History:24,  Max pw age:42, Min age: 1, Min Length: 7, Complexity Enabled, Rev. Encrypt: Disabled.  I have entered gpudate and also rebooted and I can still change PW to whatever I want.  I recently read about the password wizard and launched it.  It shows none of these settings.  But if I select any of these, it tells me that ALL passwords will be reset.  I really don't want all my users' passwords reset (remote users - and some with XP Home, would have to be reset locally).  What can I do to set password and lockout policies?  

Or, is Active Directory messed up???  I also get event ID's 1065 and 1030 claiming Group Policy cannot be applied.  Could this be related to the password issue?

Thanks.
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