Well I found the solution at this link...

http://www.jsiinc.com/SUBQ/tip8200/rh8247.htm

... not sure how this changed, but on that server the licensing mode was not set to "per user".

Thank you for your time.

>could someone have gone in and messed around with the TS licensing? this is
>held seperately to the TS manager. can you connect to server 2 and then try
>connecting to server 1 that way?