Hi Philip,
The fastest solution is to move the client to a supported environment.This environment is significant overkill for Adagio, and there is no need for this complexity.
To answer your specific questions:
1. No.
2. Yes to "Terminal Server", not specifically to "Citrix" (they're not the same). But Adagio is not a client server application.
3. Yes, but it must be with the application itself (see 2 above).
It sounds like they have a rights issue as well. Are they running this complex environment for some other applicaion? If not, then get rid of "Hyper-V" and Citrix and put in place MS and Terminal Server.
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Andrew Bates