Hi vstubbs.
Have you downloaded the libx264 sources from our web site and followed the instructions in https://www.nomachine.com/AR10K00695? As exaplained in the article, the libx264 library with our modification is required.
Have you enabled the codec also on client side as explained in https://www.nomachine.com/AR10K00696?
If you followed all the steps and H.264 is still not used, please send us the logs for further investigation. You can find instructions in https://www.nomachine.com/AR07K00677. You can attach them here or email to forum[at]nomachine[dot]com.