Cannot connect to server via Remote Desktop Connection

"Terminal Server is the name of the service on the 2003 server that handles remote desktops requests. When you're doing remote desktop, you're actually trying to contact this service.

This support article by Microsoft explains what to do:
Windows XP and Windows Server 2003 Are Not Advertised as Terminal Services Servers

Just take all normal precautions before updating the registry, such as creating a system restore point."