Our company made the mistake of installing a proof-of-concept of terminal server on a non-domain controller and non-production server. Then you need to convert the server to run in Application Mode. One of the bad things is that in order to get your server to allow more than 3 simultaneous connections you need to install, and license, terminal server. XP is limited to a single console connection and no RDP, Server is limited to a single console connection and two other RDP connections (total of 3). XP is limited to 10 connections, Server is not limited. One of the good things about Windows Server versus XP is the number of connections that you can have.
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