Is your Vista Machine SP1?
It also appears that it needs to be switched on in group policy.
QUOTE
Group Policy settings
The following Group Policy settings have been added for Terminal Services printing:
•Use Terminal Services Easy Print printer driver first
This policy setting is located in the following node of the Local Group Policy Editor:
Computer Configuration\Administrative Templates\Windows Components\Terminal Services\Terminal Server\Printer Redirection
The possible values are:
•Enabled or Not configured: If this policy setting is enabled or not configured, the terminal server will first try to use the Terminal Services Easy Print driver to install all client printers. If for any reason the Terminal Services Easy Print driver cannot be used, a printer driver on the terminal server that matches the client printer will be used. If the terminal server does not have a printer driver that matches the clie
Group Policy settings
The following Group Policy settings have been added for Terminal Services printing:
•Use Terminal Services Easy Print printer driver first
This policy setting is located in the following node of the Local Group Policy Editor:
Computer Configuration\Administrative Templates\Windows Components\Terminal Services\Terminal Server\Printer Redirection
The possible values are:
•Enabled or Not configured: If this policy setting is enabled or not configured, the terminal server will first try to use the Terminal Services Easy Print driver to install all client printers. If for any reason the Terminal Services Easy Print driver cannot be used, a printer driver on the terminal server that matches the client printer will be used. If the terminal server does not have a printer driver that matches the client printer, the client printer will not be available for the Terminal Services session. By default, this policy setting is not configured.
•Disabled: If you disable this policy setting, the terminal server will try to find a suitable printer driver to install the client printer. If the terminal server does not have a printer driver that matches the client printer, the server will try to use the Terminal Services Easy Print driver to install the client printer. If for any reason the Terminal Services Easy Print driver cannot be used, the client printer will not be available for the Terminal Services session.
nt printer, the client printer will not be available for the Terminal Services session. By default, this policy setting is not configured.•Disabled: If you disable this policy setting, the terminal server will try to find a suitable printer driver to install the client printer. If the terminal server does not have a printer driver that matches the client printer, the server will try to use the Terminal Services Easy Print driver to install the client printer. If for any reason the Terminal Services Easy Print driver cannot be used, the client printer will not be available for the Terminal Services session.
Glad they go into a lot of detail there?!?