Hi acdc1982,
From the top of my head, I can't tell you exactly where to go on this one, it's been a few years since I've messed with group policies on 2003. I take it these policies are set by the DC? (I have to ask, I've seen some wierd stuff!). On the terminal services server (not the one that issues client licenses, the one that users actually connect to), there is a policy which basically stops the server from inheriting the policies from the DC. I know in 2000 is called something like Inherit Server Settings, which is enabled by default. In your Group Policy Management, look out for Policy Inheritance, and I'm sure you can disable it from there. Then you can set whatever policies you like locally!
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