Michael,
Microsoft RDP and Terminal Services are, by default, compressed and encrypted. As such, the default Cisco WAAS policy for these applications is to apply TCP optimizations only. RDP and Terminal Services can be configured to allow Cisco WAAS to provide full optimization (DRE, LZ, TFO) which is a 2X-10X improvement over native WAN and 2X-3X improvement over the compression provided by Microsoft.
Configuring Microsoft RDP and Terminal Services to support Cisco WAAS full optimization requires a change to the client and a change to the server.
On the client, disable compression by editing the .RDP file for the connection using Notepad or a similar text editor. Identify a line in the file that shows "compression:i:1". Modify this line to say "compression:i:0". This disables compression for the RDP/TS connection.
On the server, open the Terminal Services Configuration found under Start > Programs > Administrative Tools. From here, expand Terminal Services Configuration to Connections. Double-click the "RDP-Tcp" entry found in the workspace. Change the encryption level to "Low", which specifies that only login will be encrypted. Then, click "Ok" and close Terminal Services Configuration.
Then, modify the Cisco WAAS policy on the configured device group (or explicitly on each of the WAEs) called "MS-Terminal-Services". Set this policy to "Optimize Full".
Regards,
Zach