This problem is addressed in ArcGIS 8.1 Service Pack 1. See the Related Information section for the the location of the Patches and Service packs download location, then select ArcInfo Desktop, then find ArcGIS 8.1 Service Pack 1.
The SDTS Point to Coverage and SDTS Raster to Grid tools freeze after the input dataset is selected, or an error is produced. This occurs when using ArcView with a single use license.
When using ArcView or ArcEditor with a floating license, one of the following errors will be produced:
"An error occurred while running 'SDTS Raster to Grid'. Unloading the Tool."
"FLEXlm Error: Cannot connect to license server"
The tool will freeze at this point for one of the following reasons: the server (lmgrd) has not been started yet, the wrong port@host or license file is being used, or the port or hostname in the license file has been changed.
There is a known issue with the 8.1 license manager of the SDTS tools and the ArcView and/or ArcEditor license.