The Terminal Server Licensing MMC snap-in or the TS Licensing Manager MMC snap-in uses NT LAN Manager instead of the Kerberos protocol to pass authentication, respectively, in Windows Server 2003 or in Windows Vista and Windows Server 2008
Consider the following scenario:
- The Terminal Server Licensing Microsoft Management Console (MMC) snap-in is installed on a computer that is running Windows Server 2003 or the TS Licensing Manager MMC snap-in is installed on a computer that is running Windows Server 2008 or Windows Vista.
- You use the TS Licensing Manager MMC snap-in or the Terminal Server Licensing MMC snap-in to connect to a remote terminal licensing server.
- Only Kerberos authentication is enabled in the network environment, such as smartcard only logon.
In this scenario, you cannot connect to the remote terminal licensing server in the TS Licensing MMC snap-in or the TS Licensing Manager MMC snap-in.
This is because the TS licensing Manager MMC snap-in or TS Licensing MMC snap-in uses NT LAN Manager (NTLM) instead of the Kerberos protocol to pass authentication.
For more information on this issue, including potential causes, workarounds, and resolutions, see: Microsoft KB Article KB968995.

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