Windows 2008 update disables Remote Connection access

Could the updates have wrecked this setup?

Possibly but unlikely. First things first, check that the Terminal Services service is running in Control Panel > Administrative Tools > Services

If this service isn't started then that may explain your issues. Once you've confirmed this isn't the problem then we'll need to check whether another service/program has taken the RDP port (3389) by running this command: netstat -ano | find ":3389"

Take note of the last set of numbers to the far right - this represents the Process ID of the program/service that is using the RDP port.

Now open the Task Manager, click on the Services tab, then click on the PID column to sort it. Locate the PID noted down earlier - you should see several services with the same PID (which is perfectly normal).

We just need to make sure the PID noted down from the netstat command earlier matches up with the Terminal Services service. If this isn't the case, kill the offending process that's taken the 3389 port and then restart the Terminal Services service.

And if so, can I do a system restore to yesterday? There doesn't seem to be that option in All Programs->Accessories->System Tools

No, you can't do a system restore on a Domain Controller and for good reason - you will introduce USN rollback issues if you incorrectly restore a DC. Have a good read of this article to get a better understanding of USN rollback: http://support.microsoft.com/kb/875495

This isn't exactly a scenario where I'd consider restoring a DC from backups either as there's other methods of gaining remote access to a system such as VNC, TeamViewer, etc. which you can use until you address the RDP issues.

First, There is no Terminal Services listed in SERVICES. All the Remote services are set to manual. I then did a netstat -ano command and the only process found was 1324 which is the DNS service:There was no port 3389 listed.

Is this a 2008 or 2008 R2 server? In 2008 R2 Terminal Services was renamed to Remote Desktop Services so look for that service.

Found Remote Desktop Service, it was set to manual. I started it  but even with it started no port 3389 was active nor was it listed in Task Manager.

So running the netstat command I posted earlier yielded no results? Please copy and paste from the box below into a Command Prompt window on your server if possible:

netstat -ano | find ":3389"

Select allOpen in new window

Paste the results here if possible.

Tried it again. No results. Just the next command prompt.

On the DC not the target DC. BTW both are running Windows 2008 R2

Also, I tried to connect to the target machine from a Windows 7 workstation and got the same results.

On the target machine there is a result as follows:
TCP/IP   0.0.0.0:3389     0.0.0.0       Listening     1100
TCP/IP      [::] :3389          [::] 0         Listening      1100

Process 1100 returns

WinRM
TermServices
nfaSrv
Ktmsrm
DNScache
CrytSvc

Did some more testing. By pinging the target machine, I found out that culprit is DNS. I can use the RDC if I specify the target machine by IP, but not by name. I thought I had AD working on both machines, but it seems to be active only on the target machine. What course of action from here would you suggest ?

Which two machines are you talking about here? Your DCs?

Please clarify which machine you can connect to via host name and which one you can't.

Any machine can connect to the target machine, DC named win2k8, by IP, but not by name.  Win2k8 is running AD. The DC named Office64 is a second DC that I thought was also running AD, but it turns out is not.

Yep it sounds like you definitely have some DNS issues going on in your environment.

When you ping the server named AD by hostname do you get any replies or does the ping timeout with the error message "Ping request could not find host AD."?

"Ping AD" returns the external IP for my network and then times out. Same for "Ping Win2k8"

When you say external IP, are you referring to your public IP address?

Yes, the public IP

Thanks, I'll repost this issue in the DNS topic.