XenApp 6.5 Adaptive Display will not work if you enable Progressive Display in the policies
Adaptive Display is now enabled by default in XenApp 6.5. Adaptive Display dynamically adjusts image quality and frame rates to deliver the best possible user experience when viewing graphics or server-rendered video content over a limited bandwidth network connection.
Adaptive Display is the successor to Progressive Display technology. Adaptive Display is self-tuning and generally does not require configuration. However, Adaptive Display policies are available should you wish to adjust the behavior of this feature. To configure Adaptive Display on XenApp 6.5, use Windows Group Policy Editor (gpedit.msc)* and follow the procedures outlined in eDocs, the Citrix Documentation Library. (Adaptive Display policies cannot be configured using AppCenter)
Adaptive Display that has been released for XenApp 6.5 with hotfix Hotfix XA650W2K8R2X64025 (this hotfix replaced the hotfix that initially added Adaptive display to XenApp 6.5)
When I used the HDX monitor to check if all HDX features where configured correctly HDX monitor indicated that Adaptive Display was not enabled and that the Progressive Display policy was overriding Adaptive Display.
With the Adaptive Display options not listed in AppCenter it is easy to enable the wrong policies that will override and disable Adaptive Display.
When I removed the ‘Progressive Compression level ‘setting entry (User policies->ICA\Visual Display\Moving images) HDX monitor indicated that Adaptive Display was now enabled.
I can imagine that in many cases the Progressive Display policies have been enabled when XenApp 6.5 was initially installed and configured causing the new Adaptive Display features to be disabled automatically when this option was added to the XenApp environment at some point by installing the recommended hotfixes.
HDX monitor is the only way to find out that this is not optimally configured. You can download HDX monitor 2.0 here. (only for XenDesktop 5.5+ and XenApp 6.5)
Note: @IngMarVerheij commented that Adaptive Display will also work when you set progressive display to ‘none’ and that if you want to disable all compression you also need to disable Moving images compression.