[gdkenoyer]

Our policy has required me to implement FIPS Compliant System Crypto. To (re)enable remote Server management, I upgraded the workstations' RDP to v5.2.3790.1830 (from 5.1.2600.2186).

I now no longer get the "the client could no establish a connection..." error box and can connect from my WinXP SP2 workstations to my W2k3 SP1 Servers fine.

BUT I cannot use the new client to connect to any other XP WORKSTATION. I get an error box similar to the old "the client could not..." but this one has a 4th "likely cause" of:

"The remote computer might not support the required FIPS security level. Please lower the client side required security level Policy, or contact your network administrator for assistance."

The FIPs is a domain-wide policy, and the workstations are current in patches and have rebooted since the policy was imposed.

[gdkenoyer]

This is sad, I'm replying to myself...and not even giving an answer.

Note that this is also posted over in the Microsoft Forums in the Windows Terminal Services section.

In the MS Frorum, "TP" noted that the old client was still available/useable:

When connecting to an XP Pro workstation, use the older 
5.1.2600.2180 client. It is still installed on your workstation, 
because it is part of the OS. 

Use Start-->Run-->mstsc.exe 

Or you can create a shortcut to it: 

Right-click on the Desktop-->New-->Shortcut-->mstsc.exe

However, using two clients is a pain and I'm hoping that there's a better answer.