NTLM is suite of security protocols used to authenticate users when connecting to remote computers. It is commonly used in Remote Desktop Protocol (RDP) and Remote Desktop Gateway (RDG) connections.
There are two main versions, NTLMv1 & NTLMv2
The client always chooses the protocol. This is declared by the protocol definition.
SPS is a proxy and does not play a client or server role in these communications and does not decide which version of NTLM to use.