When I first setup a Windows 2000 and then 2003 Server in our office using per-server licensing, we got the default 5-user CAL pack. I noticed that after 3 users logged in, the Server would kick out a notice that I had too many people has logged in. That's when I noticed that the Server was counting users twice - once for their login, and once for their computer... For example, if User X logs in from Computer Y, then both X and Y would show up as having used a license.
The only workaround I found was to disable the License Logging Service.
What was I doing wrong?
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You weren't doing anything wrong, per se. The License Logging Service is deprecated (except on some of the "Small Business Server" flavors) and you're safe to disable it.
The License Logging service is a tool that was originally designed to help customers manage licenses for Microsoft server products that are licensed in the Server Client Access License (CAL) model.
By default, the License Logging service is disabled in Microsoft Windows Server™ 2003. Because of original design constraints and evolving license terms and conditions, the License Logging service cannot provide an accurate view of the total number of CALs that are purchased as compared to the total number of CALs that are used on a single server or across the enterprise. The CALs that are reported by the License Logging service may conflict with the interpretation of the End User License Agreement (EULA) and with Product Usage Rights (PUR). The License Logging service will not be included in future versions of the Windows operating system.
From http://technet.microsoft.com/en-us/library/aa995711.aspx
See also: http://support.microsoft.com/kb/316631
From Evan Anderson -
The License Logging Service is deprecated in Windows Server 2003. It does not count license usage correctly, as you have seen, and so you did the right thing by disabling it. On a fresh installation of Windows Server 2003, the service is disabled by default.
Microsoft explains this in KB824196: http://support.microsoft.com/kb/824196.
From Jay Michaud
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