A newsgroup post suggests that this error might be caused by a CD-ROM on clients computer.
Please see Citrix article CTX207308
if error occurs on a Microsoft Terminal Server or Citrix Metaframe: "...This can happen when an application is attempting to access a client device during a disconnect..."
Check Citrix Server Administration when you see this event appear. The best way to determine what client device is causing this issue is to turn off client device mapping (client drive, client com ports, client printers). Enable them one at a time and monitor the client's logon process.
If you find that you are receiving these timeouts due to network latency, you can modify the timeout values in the registry key shown below:
Increase the settings for the following:
RequestTimeout: Default is 60 (in seconds)
DirCacheTimeout Default is 30 seconds
CacheTimeout is 60 seconds