Terminal server is not loading profiles; it is possible to log in with a default profile, but many things would be missing. Error message reported insuffucient resources. Noticed several terminal sessions had initial login over a month ago. Restarted some services with large memory consumption (but not large enough to cause problems) Discovered virtual memory was on manual, and returned to system managed. No improvement.
Windows Terminal Server 2003 in user licensing mode; most all clients are Widnows XP
Microsoft offers UPHClean to help track down any memory leak issues in User Profiles. I've had some success with the tool (other times it wasn't a help).
http://www.microsoft.com/downloads/details.aspx?FamilyId=1B286E6D-8912-4E18-B570-42470E2F3582&displaylang=en
Implemented changes to pool settings recommended in KB935649 However, this required restarting the server, which probably would have cleared a resource error anyway.
We've seen this due to a memory leak in some application or component (such as AV or backup agent software). We usually have had to restart the server. Have you done this? You mentioned restarting services, but not the server itself.
The only thing that comes to mind is permissions. I know the error says resources, but this seems more like a permissions thing to me. Just for giggles make everyone (or a select few) an admin (don't forget to turn this off) and see if your problem disappears. If it does, then permissions is your culprit.