Hi Arun,
I wonder at this point, if it isn't something inherent in your network topology that is causing this issue. You mentioned earlier that DS Server is slow to respond even with just one RT target. Perhaps there is still something different in your setup from mine....I have attached a very simple VI I'd like you to run on the RT targets in question. You'll have to change the hostname in the URL for the datasocket Vi's, but otherwise it's pretty straight forward. This will also take CVI out of the picture entirely, since all we care about is the behavior of the DS server.
As for the network, how do you have the IP's configured for the RT targets -- is it DHCP or a static IP address? Are you going through a router that is common to all four RT targets? Can you try using a crossover cable between the RT target and the machine running the DS Server?
Also, (just FYI), Windows Server 2003 is not officially supported with DS Server. I've only been trying this with XP Prof SP2.
Let me know what you find out!