by   April 12 2011   
Terminal Server Connection issue, You could not be authenticated on this server 2003. Windows SBS 2003 Terminal Server that has been updated more than once with SP2 may lose trust with the forest domain. This occurred during a rollback fix on SBS 2003. SPS2 reapplied caused trust between the 2 servers to fail.

You could not be authenticated on this server 2003.

Windows SBS 2003 Terminal Server that has been updated more than once with SP2 may lose trust with the forest domain. This occurred during a rollback fix on SBS 2003. SPS2 reapplied caused trust between the 2 servers to fail.  

Terminal Server Connection issue.
You could not be authenticated on this server.

ISSUE NOTES:

This issue started on a good working terminal server after a security updated was installed on 1-18-2011. The security update caused the system not to start and a rollback was conducted.

After the server came back online other issues were noted and SP2 was reapplied.

Once the SP2 update was applied we lost trust relationships between the terminal license server and the SBS2003 terminal server.

Microsoft notes a hotfix which is noted here.

Additional information:

SBS 2003 Terminal Server lost connection to License server can not authenticate

Windows SBS 2003 Terminal Server that has been updated more than once with SP2 may lose trust with the forest domain. This occurred during a rollback fix on SBS 2003. SPS2 reapplied caused trust between the 2 servers to fail.

A Microsoft Windows Server 2003-based server that has Terminal Server enabled and that is located in a forest cannot obtain a license from a Terminal Server license server that is located in a different forest when those forests are connected by an external trust.

Microsoft has a single hot fix for this issue.

As of this writing we have not applied this fix to see if it is the actual issue. But everything points to this since this was a working TS prior to a security update 1-18-2011.

Note External trusts only support NTLM authentication. External trusts are also known as "down-level trusts" or "Microsoft Windows NT Server 4.0 trusts."

Reference article: Microsoft KB 905687

Before applying this hotfix be sure this is actually your issue. We have spent more than 20 hours researching and testing. This included review of all policies on both the domain controller and terminal server.

The Hotfix listed here is for SP1 not SP2. If you attempt to install it on SBS2003 SP2 it will inform you that you have a more current update. So this issue really doesn't apply to you.

Microsoft hotfix SBS2003 failure to authenticate TS license serverHotfix Download Available
View and request hotfix downloads

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Terminal Server Connection issue, You could not be authenticated on this server 2003. Windows SBS 2003 Terminal Server that has been updated more than once with SP2 may lose trust with the forest domain. This occurred during a rollback fix on SBS 2003. SPS2 reapplied caused trust between the 2 servers to fail.