installation not working on Windows 2003 or Windows XP

I have2 computers with fresh installs of Windows 2003 and Windows XP SP3 all patches of Windows have been installed.

I started with the Windows 2003 server and installed the 2X ApplicationServer and LoadBalancer and used the small business option during the install. I used the administrator account and the server is not part of a domain for now, just workgroup.

The install was fine without errors. But when I added an application like "notepad" or a defined application I get the following balloon message from the information bar of Windows. "2X ApplicationServer and LoadBalancer" "TS Agent localhost was disabled code 2"

I searched the forums but didn't find anything.

I went ahead and tried the same installation on a fresh XP box with the exact same problem.

here is the modules information:
2XConsole.exe version 6.1 (build 465)
2XProxyGateway.exe version 6.1 (build 465)
2XController.exe version 6.1 (build 465)
2XAgent.exe version 6.1 (build 465)
2XRedundancy.exe version 6.1 (build 465)
2XPrinterRedirector.exe version 6.1 (build 465)
memshell.exe version 6.1 (build 465)
ssleay32.dll version 0.9.8
libeay32.dll version 0.9.8
winhttp.dll version 5.2.3790.1830 (srv03_sp1_rtm.050324-1447)

From the Farm area inside the Terminal Server tab I see the message : Agent OK
but when I click on check status it says Terminal Services Not enabled, citrix services not enabled

Status: Agent in use by Controller on machine 127.0.0.1

Any help would be appreciated.