I found this solution that is similar to my issue and it helped answer a lot of questions.
My issue is a little different.
The local printer that I am trying to print to from a Terminal Server session is not physically attached to the computer. Is is a locally created network printer that prints through a TCP/IP connection. It prints through the network, but is configured on the computer as a local printer.
Is it possible to have a terminal server session print to this printer even though it is not physically attached?
When I log into TS, the printer does not even appear in the printer list on the terminal server.
What steps might I be missing that would prevent this from working? I followed the steps listed in the other case I posted above and it did help me when I attached a printer locally. But I need it to work with a networked printer.