Cannot log on through Terminal Services

I have a new servers, running Windows Server 2003 R2, it is the Domain controller and the Terminal Server.

Terminal services is configured and has 6 CALs.  Users that are members of Domain Users and Remote Desktop Users cannot log on through Terminal Services.  Upon starting an RDP session and entering username/password they get the standard message: "To log on to this remote computer you must be granted the allow log on through terminal services right. By default the remote desktop users group ...".  They are members of this group and still can not log in. I checked the rights of the RDU group and everything looks normal.  In active directory the profile does NOT have the deny login to terminal servers checked.

This was not a problem in Windows Server 2003 SP1 or lesser, where it was possible to right-click My Computer and select the Remote tab and and add Remote Users there.
IvertecAsked:
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caddladyConnect With a Mentor Commented:
The only policy above those is OU (organizational unit)  - do you have an GPOs linked to an OU?
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caddladyCommented:
What about your Policies for  

Allow logon through Terminal Services

or

Deny logon through Terminal Services
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IvertecAuthor Commented:
Hi caddlady,

Thanks for your quick response.

The Remote Desktop Users group has the permission to Allow log on through Terminal Services in Group Policy in Active Directory and also locally in the Domain Security Policy and the Domain Controller Security Policy.

The Deny log on through terminal services permission is not configured.
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caddladyCommented:
What about those policies for Group  

try looking at   gpedit.msc   to look at the policies there.
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IvertecAuthor Commented:
Just checked that out.

RDU group are in the "Allow log on locally" and "Allow log on through Terminal Services" policies.

"Deny log on locally" and "Deny log on through Terminal Services" contain no user or group.

I am beginning to think that this issue may be peculiar to W2k3 R2.
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modathirCommented:
Hi,
As caddlady said check local policy on TS
On the Terminal Server start > run> type gpedit.msc enter >Local policy> User Rihgts Assignment > Allow logon through Terminal Services
Make sure that Remote Desktop Users are added

Thanks
Mo
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IvertecAuthor Commented:
Hi Mo,

Yeah, Remote Desktop Users group have been added and still no luck.

Jim
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modathirCommented:
Ok try to add there the users by name add one user for test & go to command line type gpupdate & try to logon to terminal server as that user.
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IvertecAuthor Commented:
Thanks Mo,

I have added the user, ran GPUPDATE /FORCE and still cannot log on to the Terminal Server.

Jim
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modathirCommented:
In Active Directory Users & Computers right click on one of the users that you added last time & go properties > Dail-in tab > remote access permissions (Dail-in or VPN) make sure is Allow access.

Thanks
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IvertecAuthor Commented:
Allow Access is checked in Properties>Dial-In tab.

I have gone over all the steps again and the user is still unable to log on through TS.

At this stage I'm convinced that the issue is specific to R2 and am thinking about implementing a separate box running W2k3 SP1 for Terminal Server. However, my client may not agree to that due to the extra licence involved, and to be honest, he would be right.
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IvertecAuthor Commented:
Thanks caddlady.

I haven't had time to post until now; sorry for the delay.
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caddladyCommented:
Did you find the error?
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