>If you want to go TS on VM, setup such..

Both servers are VM's

>What were your reasons to go VM with the TS ?

My old setup had one server that was both the file server and terminal server. I'm moving my entire environment to VMWare as much as possible, for business reasons. Hardware consolidation, hardware independence, easier disaster recovery.

I am considering taking down the terminal server and loading remote desktop services on the file server VM and combining the services again. That will solve the performance issue in the short run, but it would hurt my further plans. I had intended to build a VMware cluster with shared storage on a SAN so I can set up load balancing and high availability. I'm trying to go from one host and one TS to a terminal server farm.