Problem using Smart Card Reader with Remote Desktop Connection

We have problem using smart card reader when Remote Desktop connection is
made.

Our application (running as windows service) uses smartcard reader. This
application is installed on Machine A (Windows XP).
Smartcard reader is connected to Machine A itself. Normally application is
able to detect & use smartcard reader.
If we connect to Machine A from another Machine B (also Windows XP) via
Remote Desktop Connection, the application on Machine A looses connection to
smartcard reader. This happens only when RDP connection is made.
To rule out possibility of problem in our application, we tested smartcard
reader with a Smartcard test utility (SmartPCSCDiag.exe) from SCM Micro. This
utility is also not able to detect card reader when RDP connection is there.
It seems that Smartcard Resource Manager is stopped/disabled by windows when
RDP connection is made.
I have following queries:

1. Does RDP connection really have impact on Smartcard Resource Manager
functioning?
2. If yes, what is the workaround/solution to this problem?