Is your servers' IP address assigned by DHCP? It should be static and it should be a DHCP server too. Please post the ipconfig /all for the server.
Why your GPOs don't apply to the Terminal Server. The most likely reason is that the Terminal Server is in the servers OU. If you check Active Directory Servers and Users, my bet is that is you have it set up like this:
Domain.local
>MyBusiness
>>SBS Computers
>>SBS Servers
You need put the GPOs under the SBS Servers OU as well.
.png "ACUF Donor I")
