Have you checked your Group policys on the server for printing?
Check here - I know its 2003 but usually they are semi cross compatible -
Network Printing Group Policy Settings
The following table lists and describes the Group Policy settings that are associated with Network Printing.
Group Policy Settings Associated with Network Printing
Group Policy Setting Description
Allow printers to be published
Determines whether the computerÂ’s shared printers can be published in Active Directory.
Disallow installation of printers that use kernel-mode drivers
Determines whether printers using kernel-mode drivers can be installed on the local computer. If enabled, prevents a printer that is using kernel-mode drivers from being installed on the local computer.
Automatically publish new printers in Active Directory
Determines whether the Add Printer Wizard automatically publishes the computerÂ’s shared printers in Active Directory.
Allow pruning of published printers
Determines whether the domain controller can prune (delete from Active Directory) the printers published by this computer.
Printer browsing
Announces the presence of shared printers to print browse master servers when Active Directory is not available.
Prune printers that are not automatically republished
Determines whether the system prunes printers that are not automatically republished. (Applies to printers running on operating systems other than Windows 2000 or Windows Server 2003. Also applies to printers running on Windows 2000 or Windows Server 2003 that are published outside of their domain.)
Directory pruning interval
Specifies how often the pruning service on a domain controller contacts computers to verify that their printers are operational.
Directory pruning retry
Specifies how many times the pruning service on a domain controller repeats its attempt to contact a computer before pruning the computerÂ’s printers.
Directory pruning priority
Sets the priority of the pruning thread.
Check published state
Directs the system to periodically verify that printers published by this computer still appear in Active Directory. Also specifies how often the system repeats verification.
Web-based printing
Determines whether Internet printing is supported on this server. (If you disable this policy, Internet printing is not supported.)
Custom support URL in the Printers and Faxes folder
Adds a customized Web page link to the Printers and Faxes folder. By default, the Printers and Faxes folder includes a link to the Microsoft Support Web page or to the Web page for the vendor of the currently selected printer. You can use this policy to replace the default link with a link to your organizationÂ’s Web page.
Computer location
Specifies the default location criteria used when searching for printers.
Pre-populate printer search location text
Enables the physical Location Tracking support feature of Windows Server 2003 printers. If you disable this policy or do not configure it, Location Tracking is disabled. Printer proximity is estimated based on IP address and subnet mask.
Allow print spooler to accept client connections
Determines how clients access the print server over the network. By default, this policy setting automatically enables connections upon creation of the first shared printer or clustered server spooler resource.
Point and Print restrictions
Restricts a client computerÂ’s ability to connect to and install a printer driver from print servers. By default, this policy setting allows managed clients to use Point and Print only with servers within their forest. An administrator can use this setting to add servers to the list of trusted print servers. Disabling this setting enables connections to any accessible print server.
For more information about Group Policy settings, see the “Group Policy Settings Reference” in the Tools and Settings Collection.
