Recently we deployed some Windows Server 2008 R2 RDS virtual servers to a customer. All was working well until a number of users were deployed to the servers. The servers would freeze for the users on the server when another user logged in. It would freeze at the preparing local session manager stage
After opening a support call with Microsoft we were instructed to rebuild the server on a physical server. On a physical box the problem went away.
Eventually it was found that adding another CPU to the VM resolved the issue. Vmware were also able to recreate the issue and an official bug has been logged for their product.