There is no log file for Royal TS, there's just the build-in logging. Judging from the error code it has something to do with encryption.
Please check the following on the server side:
Open the Terminal Services Configuration MMC (in the Administrative Tools->Terminal Services)
Open the properties for the RDP-Tcp connection.
In the general tab, ensure that Security Layer is set to Negotiage; Encryption Level is set to Client Compatible; the last checkbox Network Level Authentication is NOT checked.
Also for your redirection problem, go to the Client Settings tab and ensure that Windows Printer and Drive is not checked in the list.
cheers
Stefan