Event ID - 1003

Event Id1003
SourceTermService
DescriptionThe terminal service client has provided an invalid license.
Event InformationA Windows NT-based server that is running Terminal Server may log this error in the System event log. 
CAUSE :
A corrupted or invalid license is being supplied by the client when it connects to the Terminal Server-based server. The event log does not specify the client computer that provided the invalid license. One way to determine which client supplied the invalid license is to audit Logon and Logoff events, and then compare the System event log and the Security event log. 

This problem may not occur in later versions of Windows NT. 
RESOLUTION :
A supported fix is now available from Microsoft.
Reference Links Event ID 1003: Terminal Service Client Has Provided an Invalid License

Windows XP Clients Cannot Connect to a Windows 2000 Terminal Services Server

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