Question : Windows Server 2003 / Terminal Services Licensing Questions

I know this question has been asked many times, but in my searches I am not finding anything specific enough for me to feel comfortable enough to go out and spend several thousands dollars on licenses and be wrong.

Here is my scenario:
I have about 40 users/workstations (XP Pro) in our office. At our off-site collocation I have 4 servers.
     - domain controller and Exchange (Windows Server 2003 for Small Business Server Service Pack 2)
     - terminal server (Windows Server 2003 Standard Edition Service Pack 2)
     - web server (Windows Server 2003 R2 Standard Edition Service Pack 2)
     - sql server (Windows Server 2003 R2 Standard Edition Service Pack 2)

The terminal server is actually a Virtual Server 2005 R2 being ran from inside the domain controller. We are also running the built-in Exchange 2003 on the domain controller (Windows Server 2003 for Small Business Server Service Pack 2).

That's our setup and this is how we are using things:
     All 40 employees are using Outlook to connect to our Exchange server and about half of them (20 concurrent max) use Remote Desktop to connect to our terminal server (a virtual server on our domain controller/Exchange server).

======================================

Okay, now for the problems/questions... I obviously need to buy some licenses because I am now getting all kinds of events and errors regarding licensing.

My first question is should I be using per seat or per server licensing (which will be cheaper)? When I installed the servers 3 months ago I selected PER SERVER. My second question is which license types should I purchase (I assume both TS and Windows licenses)? Third question is how many am I currently using (temp/permanent/etc)? Fourth question is which servers actually need the licenses?

Here is what I can tell so far. When I go into the domain controller/exchange and open "Licensing" it says I have 5 installed (the 5 free that came with it) and it says maximum usage: 16. When I open Terminal Server Licensing (also on the domain controller/Exchange) it says I have unlimited "Existing Windows 2000 Server-Terminal Services CAL Token (per device)", which is irrelevant since we don't have any 2000 servers. But under "Temporary Licenses for Windows Server 2003 - Terminal Server Per Device CAL Token - type TEMPORARY" says I've issued 13. And the Exchange server says I say 750 licenses.

Here are the problems and errors that just started up this week (I believe all the temp licenses are finally expiring):
I'm having absolutely no problems with people connecting to the Terminal Server, however, I'm getting errors in the Event log and most employees' Outlook is unable to connect to Exchange... and also OWA (Outlook Web Access) - returns a 500 error for most.

Here are the events and errors:
Event Type:      Warning
Event Source:      TermServLicensing
Event Category:      None
Event ID:      21
Date:            1/28/2009
Time:            3:29:08 PM
User:            N/A
Computer:      MMSTERMINAL
Description:
The Terminal Server Licensing server MMSTERMINAL has no permanent licenses for product 'Windows Server 2003 - Terminal Server Per Device CAL Token'. Use Terminal Server Licensing administrative tool to register more licenses. The Terminal Server '192.168.2.24' was refused licenses of type 'Windows Server 2003 - Terminal Server Per Device CAL Token' due to this condition.


Event Type:      Information
Event Source:      Application Popup
Event Category:      None
Event ID:      26
Date:            1/30/2009
Time:            8:58:36 AM
User:            N/A
Computer:      MMSTERMINAL
Description:
Application popup: License Warning : Warning:  License usage for a product licensed in per server mode has exceeded the maximum number of licenses purchased and will prohibit further licenses from being granted. Consult the Application event log or Licensing from the Administrative Tools folder for more information.


Event Type:      Error
Event Source:      LicenseService
Event Category:      None
Event ID:      201
Date:            1/28/2009
Time:            1:30:59 PM
User:            N/A
Computer:      MMSTERMINAL
Description:
No license was available for user \ using product FilePrint .  Use Licensing from the Administrative Tools folder to ensure that you have sufficient licenses.

Event Type:      Warning
Event Source:      LicenseService
Event Category:      None
Event ID:      222
Date:            1/28/2009
Time:            3:08:25 PM
User:            N/A
Computer:      MMSTERMINAL
Description:
License usage for product Windows Server is at the maximum number of per server licenses purchased. New license requests may not be granted. Consult Licensing from the Administrative Tools folder for more information.


I think it's safe to assume that I need to purchase some licenses, but I'm confused. I know I eventually have to buy permanent TS licenses, but my guess is that the errors I'm seeing today are issues with the Windows Server 2003 licenses and not the Terminal Service licenses.

I hope everyone can follow me. This has become critical and I joined EE just to ask this question. I need a solution ASAP!!

I can supply screen shots, more information, or whatever anyone else needs.

Answer : Windows Server 2003 / Terminal Services Licensing Questions

You have to buy SBS client licenses for however many users you have.

Then, you should set your terminal server licensing to "per user" and buy CALs for however many users will be on the terminal server.