TS licensing server problem

I have a win2k3 server running TS server in application mode, and a TS licensing server. NO DC is running on this network. The TS server sees the licensing server but licensing server wont hand out CALs. 10 TS CALs are installed in the licensing server. It does however hand out temporary licenses. any help would be much apreciated, also all workstations are running xp pro

 

 

 

 

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