The terminal server cannot issue a client license

My client has a SBS 2003 server that is setup as the Licensing server for the Windows 2000 Server that is configured as their terminal server.  I am able to RDC to it from the SBS server and from my laptop and their VPN, but when I try to connect from addtional XP systems the connection is not allowed and on the term server get the following error "The terminal server cannot issue a client license"?  The term server licensing says it has unlimeted licenses available?

Thanks for your help.
mikehale1Asked:
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JoesmailCommented:
A Windows SBS 2003 License server has a 120 day grace period after it is first installed.

You CANNOT use a USER CAL license server for a Windows 2000 Terminal server.  They will simply not be issued.  You will need to call Microsoft Licensing for your region and tell them you have purchased USER CALS on a SBS 2003 Server with Windows 2000 Terminal Servers.  

They should be able to exchange your licenses to Windows 2003 DEVICE CALS.

This is the only licensing model that will work in your situation.  The clients will then connect and be upgraded to a Windows 2003 DEVICE CAL.
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Craig_200XCommented:
what error code are you getting in the event log?

are the tscals 2003? If so - see this link http://www.experts-exchange.com/Operating_Systems/Win2000/Q_21430531.html?query=The+terminal+server+cannot+issue+a+client+license&topics=28

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JoesmailCommented:
What licensing mode is setup?
A Windows 2000 server can only use the DEVICE CAL model.  So make sure the SBS 2003 server is in device mode.

Secondly.  If you have Windows 2000 DEVICE CALS installed on the SBS 2003 server it will error like it is above.  This is because a SBS 2003 license server needs to upgrade a request from a client device connecting to a Windows 2000 server to a Windows 2003 CAL device license.
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mikehale1Author Commented:
It is getting error 1004.

I am not sure what licensing mode was chosen when it was origianlly setup, but checke the invoice for additional CALs that where purchased and it was 20 Client User CAL.

There are no 2000 CALS on the SBS server.

Why did it work for the one system and then not work after that?
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rshooper76Commented:
Have you setup a licensing server for this Terminal Server?  If so what licensing mode are you using and how many licenses do you have?
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rshooper76Commented:
Sorry for the previous brief, but redundant reply above.  Let me elaborate.
You will need to check your licensing on your licensing server.  See what licenses it has, unlimited is not a real option, you will see it, but no licenses are being issues from here..  You need to see what licenses are available and what licenses have been issued.  The data on the invoice is useless if they never installed the licenses.  I hope this helps.
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mikehale1Author Commented:
The licensing server is the SBS 2003 server and it says Existing Windows 2000 Server - Terminal Services CAL Token (per device)
Type - Built-in
Total -  unlimited
Available - unlimted
Issued - 2

But from the post by Joesmail it looks like we may have to get the CALS converted to device, because the CALS we installed on the SBS server where definitely User CALS?
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Craig_200XCommented:
you will have to call microsoft with the 2003 information and they will issue "downgraded" license keys for Windows 2000 Server. (as the link I referred to above says)
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Kini pradeepPrincipal Cloud and security consultantCommented:
If the TS is a windows 2000 the the win xp pro clients do not require any additional cals. the builtin windows 2000 cals should be issue. what mode is the licesning server in ? it should be in per device mode as the 2000 server would only issue the win2k device cals.

how it works ?
when a client connects to the TS, the TS checks for a TS license server, if there are no licenses available or if the TSLS is not available then the TS gives a temp license to the client which is stored in the MSlicensing key of the client registry.the same is the case if the client already has a temp license then the TS would want to renew that to a permanent license. these temp cals are valid for 90 days (120 for 2k3).

so you need to make sure that the TS can discover the license server. Run LSview (reskit) on the TS and it should list the LS. if it does not then the automatic discovery is not working so, you need to override the discovery.

http://support.microsoft.com/default.aspx?scid=kb;en-us;301932

http://support.microsoft.com/default.aspx?scid=kb;en-us;q239107 (for 2k TS)

these can also be achieved through a group policy.
i repeat if the TS is 2000 (TSLS needs to be on the DC) and xp pro and win2k clients only  should get built in licenses.
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JoesmailCommented:
If the TS is a windows 2000 the the win xp pro clients do not require any additional cals. the builtin windows 2000 cals should be issue. what mode is the licesning server in ? it should be in per device mode as the 2000 server would only issue the win2k device cals.

This comment is actually incorrect if you are using a SBS 2003 licensing server.
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mikehale1Author Commented:
I ran lsview on the term server and it sees the SBS server as the licensing server and the type is Enterprise?  So it is looking like I have to get the CALS exchanged for Device CALS instead of User CALS?
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