People still get confused with the concept of Terminal Services on SBS. Many times we get calls from our customers saying that they bought SBS 2003 thinking it would support TS in application mode as its predecessor SBS 2000 did or as other versions would.
However the fact is that it does not, at least not the way you thought it would.
The best link, I could find, that describes this is Deploying Terminal Services in a Small Business Server 2003 Network
The contents are precise, logical and certainly make sense. I only hope more people read it.
From the page;
The information provided in this page is intended to address feedback that Microsoft has received from our customers regarding Microsoft® Windows® Small Business Server 2003 (SBS) and our decision to disable the Terminal Services (TS) in Application Mode feature. We value your input and wanted to clarify the intent of the change and present you with some available options to address your concerns.
The Terminal Services in Application Mode component of Microsoft® Windows Server™ 2003 operating system can deliver the Windows desktop from a centralized server to virtually any desktop computing device. This component is not available in Windows Small Business Server 2003.
Improved security, an expressed desire of all customers, was the key reason for deactivating the ability to run Terminal Services in application server mode on a server running Windows Small Business Server 2003. Running Terminal Services on a domain controller may present a security risk to the network by creating the potential for denial of service attacks against Active Directory® directory service or other server application components. Windows Server 2003 and Windows Small Business Server 2003 are more secure by default than previous versions and this change was one of a number of enhancements to the overall security of the server and network.
Performance was another important consideration. Because Terminal Services is optimized for the desktop experience, it does not coexist well with the rest of the applications and services that Windows Small Business Server includes. Terminal Services and Windows Small Business Server contend for the same resources and can conflict with one another, degrading the performance of both.
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