Recently, I've been challenged to add a network share to a Documents library, to essentially mimic the folder redirection the were familiar with in Windows XP, on a Windows Server 2008 Terminal Server.
Using a terminal server is the problem. To add a folder, local or remote, to a library, it must be indexed. Try it for yourself and you'll get an error stating that there's no index. Your recourse is to index it, or if it's a remote share, enable Offline Files. Offline Files? On a Terminal Server? Nope, by design.
Okay, then I'll enable Windows Search Service on the server hosting the share. It already has the File Services role enabled, so I'll just add the feature. And don't be confused if you see Windows 2003 Indexing Service, it's not the same! You'll want the Search Service feature. Then it's just a matter of adding your volume or folder via the Indexing Options in Control Panel.
Back to the Terminal Server and... what do you mean I can't add it? It's indexed! Well, you need the Search Service feature installed on the Terminal Server. But, when you go to Add Feature, it's not there. Rather, you've got to pretend you're going to install the File Server role, uncheck File Server, and check Search Service.
Now your Terminal Server can read the remote index on that remote share and you can add it to the Documents library. It all seems a little confusing to install a File Server role on a Terminal Server, doesn't it?