Citrix fails to receive TS client license

[magicrjm]

One of my users laptops crashed. The old laptop was about 2 or 3 years old running Windows XP Pro. A new laptop was purchased last month with Windows XP Pro. This user works remotely and uses Citrix Program Neighboorhood version 7 to connect to the external IP of the Citrix server. When he tries to connect the attempt is made and disappears immediately. There is an event log on the Windows 2000 Server stating "The terminal server cannot issue a client license" (source: TermService ID: 1004). All the 5 pcs in the office connect ok, along with Windows Vista Business Edition pcs outside the network, and versions of Windows XP Pro outside the network that are 2 or 3 years old setup the same way as this user. I attempted to resolve the problem by installing a Windows 2003 License Server on the one 2003 Domain Controller. Then, I manually edited the registry on the Win2k Terminal Server by following MS article ID: 239107. Still no luck. I see that the License Server has Built-in Unlimited licenses for "Existing Windows 2000 Server - Terminal Services CAL Token (per device)."

Background:
Windows 2000 Terminal Server is running Citrix MetaFrame XP version 1.00.

I have a mixed Microsoft enviroment with Windows 2000 servers and Windows 2003 servers. There are 2 Win2k domain controllers and 1 Windows 2003 domain controller, all on the same domain.

Do I need to install another Licenser Server on the one Windows 2000 Server Domain Controller and point the Citrix Terminal Server to the addtional Windows 2000 License Server? If so, what mode do I install this license server, remote or application?