When installing a VMware Virtual Infrastructure 3 license server to service existing ESX 3.X hosts prior to upgrade there are a number of considerations to a successful deployment. If the deployment is to Windows Server 2008 R2, there are a number of caveats to successful implementation.

The downloadable license server VMware-licenseserver-64192.exe does not install on Windows Server 2008 R2:

http://downloads.vmware.com/d/details/esx_35_licenseserver_dt/dGViZGVoKmJkZXBo

It will fail to install with the following error:

"Error 1920. Service VMware License Server failed to start. Verify that you have sufficient privileges to start system services."

In addition, critical ports are blocked by the firewall on Windws Server 2008 R2, resulting in the following error on the vCenter client:

"Call "LicenseManager.QueryUsage" for object "LicenseManager" on vCenter Server "vc.domain.com" failed."

Install the license server from VirtualCenter 2.5 Update 6, available in the ISO image or downloadable from here:

http://theether.net/download/VMware/VMware-licenseserver.exe

Once the license server is installed, open the following firewall ports:

netsh advfirewall firewall add rule name=FlexLM dir=in action=allow protocol=TCP localport=27000
netsh advfirewall firewall add rule name=FlexLM dir=in action=allow protocol=TCP localport=27010

Configure the VI3 license server fully qualified domain name in the vCenter client from Administration | vCenter Server Settings | Licensing

Unable to install the license server on Windows Server 2008
http://kb.vmware.com/kb/1018118

Configuring a legacy license server to manage ESX/ESXi 3.x hosts in vCenter Server 4.x
http://kb.vmware.com/kb/1010704