Here is my bizarre issue.
Brand new Dell R710 server with Server 2008 Standard preinstalled.  Added Terminal Services, joined to our domain.

RDP users are unable to add local printers.

Using a single user as a test, I added the user to the local security policy: "Load and unload device drivers" and run gpupdate /force - this alone should fix the problem.  It does not, I still recieve a permission error.

Just as a test, I add the specific user to the local administrators group.  Still get the permission error.

There is no domain policy being handed down - can prove with a gpresult report if you wish.

What the hell is going on?  If I log on to the server as the local administrator account with an RDP connection it works fine, but I cannot get any other user to be able to add local printers no matter how much access I grant them.