We have to XP SP2 PCs that connect to a Win2k3 server via remote desktop. When connecting, the local printers are not being installed to the server. Yes, the remote desktop connection is setup to bring in printers.
The printer is a network printer with an IP address manually assigned.
If I install a local printer, it does become available in the remote desktop session.
We have a Vista PC that is working as expected (connects via remote desktop and pulls in printers).
So to recap, in Win XP SP2, terminal services will not bring in network printer, but will bring in locally attached printer. The drivers are on the server for the printer we need to print to.