Terminal Server exceeded maximum number of connections - unusual problem

Windows Server 2003 - machine is the domain controller, TS is turned on and its also the TS license server. (Yes, I know.)  We're running per-device.

Everything was fine until another party added some more licenses...except they added them as per-user, realized their mistake and added them again as per-device.  After that, various remote users (all WinXP Pro) were no longer able to get in...after the login, they get the max connection message.

The last time the other party did this (yes, its the second time), I rebuilt the TS licensing from ground zero and all was well until they did it again last week.  So I rebuilt it again over the weekend and briefly this morning users locked out last week were able to get in.  However at some point, their sessions were disconnected and now we're back to the max connections message for SOME of the users.  (A switch at the server end supposedly locked up and was reset which was probably the disconnection event.)

Curiously, this seems to be associated with the user account instead of the machine as I can login remotely using my account on their machine (but my account is an admin account.)  So it appears to be random users that get the max connection message...terminal server manager currently shows four remote users and the console connected.

I've double checked that TS is installed and that max connections for TS is unlimited.

I can rebuild the licensing again I suppose, but I'm not sure this is a licensing problem.  I'm thinking tonight I should remove Terminal Server and reinstall it.

Any thoughts/ideas?
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dmjungAuthor Commented:
Rebooted over the weekend and things seem to be settled down at the moment.  We're looking at the "normal/standard" server licensing service instead of TS licensing as the source of our connection problem right now...

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Justin OwensITIL Problem ManagerCommented:
You ensured that all the licenses were "per device" when doing the re-install, correct?
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