Hey Happy,
been following your thread. I took an hour and set-up an SME6.5rc1 test box. Install went fine, connected an extra printer to LPT1, then headed to the Server Manager.
Followed the prompts to add printer, selected the "Local printer port 0(LPT1)". Let the SME finish doing its thing.
Went to my XP workstation, control panel, printer and faxes, chose add printer, selected networked printer, browsed to select the printer. At this point XP wants the server to give it the driver, which SME is not going to do. So I elected to choose my own driver, let it install the driver and fired off a test page. Worked fine.
Wanted to test this for you to see if there was a bug in SME6.5rc1, does not appear to be.
Hope this helps
Joe