When you try to connect to a Windows 2000 Terminal Server from a Terminal Server Client, you receive:
Event ID 1004: Terminal server cannot issue a client license.
The problem can be caused by altered registry permissions on the Terminal Server Client computer.
To fix the problem:
1. Insure that there is no communication issue between the Terminal Server and the Terminal Server License server:
a. You can verify connectivity by pinging from the client to Terminal Services, and from Terminal Services to the client by IP address. If you connect by name, ping by name.
b. Verify that you can ping with a fixed packed size of 1472 (ping -l 1472 -f <IP Address>). If this fails, use a smaller size until you are successful. Configure the network to use this smaller MTU.
2. On the Terminal Server Client, grant Everyone Full Control on HKEY_LOCAL_MACHINE\Software\Microsoft\MSLicensing\Store\LICENSE00x.