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LicenseService reports out of license error

Our NT server has been reporting the following error in the event log:

"The product Windows NT Server is out of licenses.  Use License Manager from the Administrative Tools folder for more information on which users are out of compliance and how many licenses should be purchased."

Our problem is that even though we have previously deleted the licenses of all expired users (that is, staff who have left this organisation's employ)in License Manager, these users keep being re-created and consequently the system believes we have more users than licenses. These old users no longer have NT accounts (that is, they do not appear in User Manager for Domains).
1 Solution

I just need to check on few items regarding your licensing.

1.Is the server running so that it allocates licenses as a "per-seat" or "per server"
perserver is the prefered dynamic option.
The problem is if you read the help file on licensing that this is a one time one way option and its the wrong way for what i would have you do.

2.Using many services at one can use more than one license.
(blame microsoft for this)

3.If you are using a newer version of "Small Business server". There is no easy option to add licenses other than to pay microsoft for a license upgrade pack.

I've had the same problem in the past. What I did was in license manager, I highlight all the users and delete them from the license manager log. Also, if you logon on locally to an NT workstation then logon to the network as the same user. It will take up two licenses. Weired, I know.
you could try to reset the license statistics.  Maybe this is not the best solution, but I'm sure it will work.

The license service uses the following files to store license data:
 - Purchase history:    %systemroot%\System32\Cpl.cfg
 - Connection history:  %systemroot%\System32\LLS\Llsuser.lls
 - Group information:   %systemroot%\System32\LLS\Llsmap.lls
These files are created when the License Manager service starts.
To reset the License Manager information:
1. Stop the License Logging service.
2. Delete or rename the following files on the primary domain controller
   or the enterprise server:
3. Restart the License Logging service.
4. Re-add the appropriate license information.

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