I can usually get around this issue by closing the Console with the Task Manager and trying it again. Often there are a few seconds between when the smart card is detected and when the Server Busy error message appears during which I can enter in the PIN. Once the PIN is entered, then things work fine without a problem.
Today, I have tried to login 10 times, but the Server Busy error keeps coming up immediately after the smart card PIN entry thing shows up. There is no way I can login to the console.
This is a big problem and should be treated seriously.
EDIT: I will test out this possible solution and report back:
Navigate to Computer Configuration | Administrative Templates | Windows Components | Remote Desktop Services | Remote Desktop Session Host | Security and then find the policy “Always prompt for password upon connection”
If the value is “Enable” or “Not configured” please change it to “Disable”. Even if this value is set to “Not configured”
Run gpupdate /force and test again.
This came from a KB article for a 3rd party product that also deals with smart card authentication, CyberArk PSM: https://cyberark-customers.force.com/s/article/00005032