Allow users to set wallpaper in TS 2008

Most postings are for prohibiting users from changing their wallpaper in terminal server. I would like to actually allow our users to set their own wallpaper but what is happening is that once they set the wallpaper it goes back to the default after they log out. I've looked all through the policy settings and can't see where by default changing the wallpaper is being prohibited.
RobertwcAsked:
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Darius GhassemConnect With a Mentor Commented:
Correct.
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Darius GhassemCommented:
Are you sure this option isn't enabled.

Enforce removal of remote desktop wallpaper

http://technet.microsoft.com/en-us/library/cc770884.aspx
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RobertwcAuthor Commented:
The terminal server is 2008 but the domain is 2003, so when I'm in GPMC I don't see that setting under \Administrative Templates\Windows Components\Terminal Services\Remote Session Environment.
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Darius GhassemCommented:
Is the 2003 domain set at a 2003 forest server level?
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RobertwcAuthor Commented:
The "Forest Functional Level" shows  Windows 2000.
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Darius GhassemCommented:
That might be the problem. You need to have at least  2003 forest level to run a 2008 Terminal server with certain GPOs. Check in the local policy of the 2008 server for the above GP.
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RobertwcAuthor Commented:
I might not be looking in the right location but in the local security policy of the 2008 server I'm not finding any refereences to terminal server settings. Also, I'm guessing I would need to remove the last 2000 DC before the dmain/forrest functional level could be upgraded to 2003.
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