The Virtual Private server is not a dedicated server. It is a 'virtual' computer running as an application. It has a virtual hard disk, allotted memory, etc. The downside is less-than-desirable specs. The bright side is low costs for good bandwidth. This is where the actual game server is hosted (for the bandwidth, obviously).
My 'local server' is a headless serving running Windows Server 2003 where I mirror the VPS emu files. Great specs, but limited bandwidth, so it is not an ideal host.
The key is that both my local server and the VPS are running server 2003. Something is funky with the VPS - which isn't surprising.
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