Unable to login with more than 2 users even with 50 RDS CALs installed

Scenario: We have a WS2019 workgroup server that has RD Licensing and RD Session Host roles installed.

We have 50 licenses installed and License diagnoser doesn't show any problems, all green.

Since this is workgroup server, we have converted our Per User CALs to Per Device CALs using the RD Licensing Manager console.

We have set the Local Group Policy to use 'localhost' as License server and License type as 'Per device'.

Problem: When we try to connect to the server with more than 2 users, we get a pop-up asking to disconnect one of the existing sessions.

I have tried reinstalling the licenses, removing and reinstalling the roles but no use. I don't know what else to do.

Dumbest solution I could ever imagine.

We were using the .rdp file downloaded from the Azure portal. This RDP file had the predefined parameter administrative session:i:1, that means it was starting the session as administrator. This was causing the issue. I don't know if this is the default behavior or a bug in RDP but I kept hitting the wall because of this.

Started a new RDP session with normal RUN > mstsc and it worked without any problems. Now, I can login with more than 2 users without any problems.