Frequently Dropped Connections with Terminal Services or Citrix across WAN

On a TCP/IP-based WAN connection if the maximum packet size on a segment is smaller than the maximum packet size of one of the servers and the routers involved do not send a ICMP response or if the firewall drops such packets, it is referred to as a "black hole" router.

some of the errors encountered due to this configuration are:

Remote connections cannot be enabled at the remote computer.

Connections to remte computers are dropped.

The maximum number of connections is exceeded at the remote computer.

A network error occurs while establishing the connection.

Server-side Error: Event ID 1004
Source: TermService
Description: "The terminal server cannot issue a client license. It was unable to issue the license due to a changed (mismatched) client license, insufficient memory, or an internal error. Further details for this problem may have been reported at the client's computer."

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Microsoft recommends the following troubleshooting methods:

ping computer_name or IP_address -f -l 1472

If the MTU of every segment of a routed connection is at least 1,500, the packet is successfully returned.

If there are intermediate segments that have smaller MTUs, and the routers return the appropriate ICMP "destination unreachable" packet, the Ping utility displays the message, "Packet needs to be fragmented but DF set."

If there are intermediate segments that have smaller MTUs, and the routers do not return the appropriate ICMP "destination unreachable" packet, the Ping utility displays the message, "Request timed out."
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The following Microsoft recommends resolution has resolved this issue:

Enable PMTU Black Hole Detection on the Windows-based hosts that will be communicating over a WAN connection. Follow these steps:
Start Registry Editor (Regedit.exe).

Locate the following key in the registry:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\tcpip\parameters

Add the following registry value:
Value Name: EnablePMTUBHDetect
Data Type: REG_DWORD
Hex Value: 1
Quit Registry Editor, and then restart the computer.

Additionally, set the following registry entries:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Terminal Server

add the following registry value:
Value type: KeepAliveEnabled
Data Type: Reg_DWORD
Hex Value: 1

HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\Tcpip\Parameters
add the following registry values:

Value type: KeepAliveTime
Data type: Reg_DWORD
decimal value: 180000

Value type: TcpMaxDataRetransmissions
Data type: Reg_DWORD
decimal value: 10

Source: http://support.microsoft.com/default.aspx?scid=kb;EN-US;314825