This issue is caused by the (minor) latency caused when enabling software firewalls. See workaround too NIM060359 (below):While there is no guaranteed workaround to this issue, there are several solutions that may address the issue all aimed at reducing latency (Ideally combine all workarounds):Workaround 1:Set the FLEXLM_TIMEOUT system environment variable to 10000000 as shown here:<a href="http://resources.arcgis.com/content/kbase?fa=articleShow&d=35659" target="_blank">http://resources.arcgis.com/content/kbase?fa=articleShow&d=35659</a>Workaround 2:Disable firewalls. Opening ports is fine but disabling firewalls will reduce overall latency to the level that it may bring latency down to the tolerable window for borrowing.Workaround 3:Configure the service.txt file (typically found under <a href="file:C:/program" target="_blank">C:\program</a> files\arcgis\license10.0\bin\service.txt) as follows:SERVER this_host ANY 27000VENDOR ARCGIS 27010FEATURE ACT ARCGIS 1 permanent 1 7ED49106D630Then restart the ArcGIS License Manager. This will reduce the duration of the port scan while Desktop looks for a listening ArcGIS License Manager starting on port 27000-27009. (It finds LMGRD on the first scan)Then on client machine, within ArcGIS Administrator, specify the license manager host value: 27000@<LM_HOSTNAME> (eg. 27000@licsvr1)Workaround 4:Add the License Manager Server's IP Address to the "hosts" file in <a href="file:C:/Windows/System32/drivers/etc/hosts" target="_blank">C:\Windows\System32\drivers\etc\hosts</a> on the client side.