SOLVED: REVOKE option is Greyed Out in RD Licensing Manager

The basic response to this is… do not worry about it as Microsoft’s official word on the matter is:

“RDS Per User CALs are not enforced by RD Licensing. As a result, client connections can occur regardless of the number of RDS Per User CALs installed on the license server. This does not absolve administrators from Microsoft Software License Terms requirements to have a valid RDS Per User CAL for each user.”

UPDATE JAN 25 2019 – WARNING: If you are using Server 2012 see RONA’s comments at the bottom of this post.

However, if you really want to delete / revoke the Remote Desktop (RD) licenses:

1. Start your SERVICES MMC and stop the REMOTE DESKTOP LICENSE SERVICE
2. Use Explorer to delete ALL of the files in C:\Windows\System32\LServer\
3. In SERVICES MMC and start the REMOTE DESKTOP LICENSE SERVICE

Notice that all the licenses are now gone from RD License Manager.  Do not worry about this as they will be automatically recreated as your users sign in.

For more information see:

http://fbinotto.blogspot.ca/2013/05/revoking-temporary-rds-licenses.html
and
http://social.technet.microsoft.com/Forums/windowsserver/en-US/60ad0118-1cf0-4be7-ad9c-1009c6b2812f/server-2012-rds-license-issue?forum=winserverTS