Ok, I'll admit that this post is late to the party because I'm talking about Server 2003, which went EOL earlier this year. However, I'd guess that there are others like me that haven't eliminated it from their environment completely, and something similar may show up in the newer server OS versions, so here goes.
I had a couple of users who reported issues printing from their terminal server sessions. Printers were showing as installed, but if they tried to print from an application, say Excel, it would give them an error that no printers were installed and they couldn't select anything. Looking into it further, the printers were there but none were set to the default printer, and you could not manually set the default printer. Without a printer set, the applications were getting confused.
I tried recreating the roaming profiles to no avail. The printers themselves worked fine for other users and were setup locally on the terminal server. I found a Microsoft article about something similar with redirected printers that said to copy of the Default Users folder with a clean copy from another server, but that didn't seem to help either. Then I found this article. The registry hack listed there fixed it for the users that were having trouble.
Since I had regedit disabled for non-admins, I had to make changes from within a session opened by an admin. That made it a little trickier to find the correct reg key for the current user, but not impossible. What I did is expand HKEY_USERS and took a look at all the entries. Then I had the user who was having trouble login, then refreshed HKEY_USERS. Then had them logout and refreshed HKEY_USERS. It might help to do a before and after screenshot. Doing that you should be able to figure out which of the keys belong to their user account because it'll appear and disappear depending on when that user is logged in or out, and that's where you'll want to add the fix.
Have the users login, then from a session that has access to modifying the registry go to HKEY_USERS\*guid*\Software\Microsoft\Windows NT\CurrentVersion. Look for a key named Windows. If it doesn't exist, create it. Then, within Windows, create a new String value named Devices. Set the value of Devices to "winspool,Ne00", without quotes. Once done, have the user log out, then back in to your terminal server. He/She should be able to set the default printer and once again access printing services.
