I have several users on Terminal Services (NOS Windows 2000 Server, SP4; client systems Window 2000 Professional or XP Professional) to use a database. Our vendor has this set up without the TS Licensing activated. All the clients are on Temporary Licenses, which run out after around 90 days. The solution to this is to delete the MS Licensing key in the Registry of each client machine as its license expires, and the key is then rewritten for another 90 days when you log back on to the server. Our vendor says that this is a workaround for a bug in Windows 2000 Server;apparently the Server is unable to issue the free CALs that are supposed to be provided to client systems running Windows 2000 Professional or a sucessor operating system (eg Windows XP Professional). He says that the alternative is to pay Microsoft around $125 per client machine for a permanent CAL. Is this for real?

Well, with Microsoft I would say that anything is possible, especially if its licensing and money.
If you dont feel like paying up or rnning to every machine every 90 days to delete the registry key, you could write a little batch file to delete the registry key when the person logs on, you can add it to their logon on the terminal server.

Has anyone else out there ever encountered this problem? I'm wondering if our vendor is just full of it -- we have had other indications that this may be the case. So, I'm considering just turning on the TS Licensing feature and seeing what happens.

Has anyone else out there ever encountered this problem? I'm wondering if our vendor is just full of it -- we have had other indications that this may be the case. So, I'm considering just turning on the TS Licensing feature and seeing what happens.

Since your running your Terminal Server in application mode (vs. administration mode) you will need CALs to be compliant, in addition to a licensing server.

At least that's my intrepation of it, I only use TS for administration mode here. I'll see if I can dig up a real answer for you, rather than my intrepration of the licensing terms.

That's what I would think. Another board has suggested that our vendor is a moron, so there's that. I guess if I turn on the licensing server and it tries to make me pay for a CAL that should be free, I can just back out of it and go back to the registry-editing trick. Sheesh.

Here's the link I was thinking of earlier:
http://www.microsoft.com/windows2000/server/howtobuy/pricing/tsfaq.asp

That should clear things up.

PS: Did your vendor suggest removing the registry keys related to a temporary CAL? Sounds shady to me, or at the very least, it puts you in a questionable position.