You might see the error message outlined in subject while installing/uninstalling software on windows 2003 computer by connecting to terminal services. We all know that application installation has certain limitations when it comes to terminal services (anyone know why?). In such cases if you still want to install/uninstall the application on these terminal services enabled servers, you need to choose one of the following methods.
If this the requirement is just one of the case, then option#1 best suits you.
start mstsc with /console or /admin option and then connect to the server. This allows you to connect to the console of the server directly eliminating terminal services piece from you way.
Go to start -> Run -> type “mstsc /admin /v:servername” and click OK if you are using RDP client v6 or above
Go to start ->Run -> type “mstsc /console /v:servername” and click OK if you are using legacy version of RDP client.
If your administrators are expected to install applications on servers by connecting via terminal services, then you need to make sure that application installation is allowed. You can do it via group policies.
“computer configuration” -> “administrative templates” -> “windows components” -> “windows installer” -> “allow admin to install from terminal server session” should be enabled
Hope this helps.