Can DRACOON for Windows be used in a Terminal Server environment?

Yes, DRACOON for Windows supports Terminal Server.

The synchronization feature of DRACOON for Windows can significantly increase the disk space occupied by offline files, which can be problematic in Terminal Server environments where many users are active.
Although it has been limited to 5 GB of storage and 30 days of retention by default since version 4.12.1, it may be advisable to limit it even further on Terminal Server environments. In addition, it may be useful to move the storage folder for offline files ("Cache") to another hard disk (such as a high-capacity network drive).
The relevant settings can be found in the DRACOON for Windows preferences under the Sync tab in the Cache section: