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1. Next the wizard asks you where the database files for the Active Directory should be stored. It is suggested that you put these files on a disk other than the one that holds the operating system. This increases performance, because both the operating system and the Active Directory, in a larger network, will probably be accessed frequently. By placing the files on a separate disk, you can improve performance.If you don’t want to use the default disk drive or directories that the wizard suggests, use the Browse buttons for both the Database folder and the Log folder to change them to a location more suitable for your system.
2. The next wizard dialog box asks you to specify a location for the SYSVOL directory. This directory (or folder) contains public information that is replicated to all domain controllers in the domain. This is the situation when you create more than one domain controller, which is a good idea for the fault tolerance it provides. Again, you can take the default or use the Browse button to select a location that best fits your environment. Click Next after making your choice.
3. The Domain Name System server had not been installed on this computer, and Windows Server 2003 cannot find a domain controller that can resolve the name you have chosen for your domain. It is at this point that you can choose to create a DNS server on the same computer used by the Active Directory. If you want, you can fix the problem—is the DNS server for your network offline for some reason? Or you can choose to configure a DNS server after the Active Directory installation. For the purposes of this example, the default action (create the DNS server on the same server) is used.
4. You must now select what kind of permissions you will use on the server. If you are operating a mixed-mode network, which contains Windows operating systems that were marketed before Windows 2000, then select the first radio button (Permissions Compatible with pre-Windows 2000 Server Operating Systems).Note also that this radio button should be used if your Windows Server 2003 system participates in a mixed-mode network that also has domain controllers prior to Windows 2000. For example, if you still have a mixed-mode Windows 2000 network that contains Windows NT 4.0 networks, select this option.The second radio button on this Wizard dialog box lets you enable permissions to the Active Directory for just Windows Server clients. If you’ve upgraded your network to these servers (and in the case of Windows 2000, the Professional Edition), then make this selection. This will provide a more secure network than one using earlier clients or servers.
5. Finally, the wizard asks you to enter a password that can be used if you find a need to restart the server in Directory Services Restore Mode. This is not the same password used for the Administrator account on the computer. It is used only when you need to restore the Active Directory in case of a problem.
6. The Summary dialog box enables you to view the selections you have made before proceeding to create the Active Directory. Read these carefully to ensure that you are about to install the AD using selections compatible with your network. You can make changes using the Back button. When you are satisfied with your selections, click the Next button. An information dialog box will let you know that the Active Directory is being configured on your server. It will take a few minutes if you are installing on a high-end server, or longer if you are using a server based on the minimum requirements for Windows Server 2003.
7. The last Wizard dialog box lets you know that the Active Directory installation has finished. Click the Finish button. You will then have to restart the server to continue. When the system reboots, you can view the log file of what has been changed. See the location for this log file.

If you chose to install the DNS server on the same server as the Active Directory, you will see a Manage the DNS Server selection on the Manage Your Server window that appears after the reboot. For instructions on how to manage a DNS server. Because DHCP is used to provide IP addressing configuration information to clients on your network, it is important that you understand the implications of setting the scope of IP addresses that the DHCP server can allocate. Inside a private intranet (or on a SOHO cable/DSL router), be sure to assign addresses for this scope that do not interfere with another DHCP range of addresses, such as those provided by your ISP. If you already have a range of IP addresses that are valid on the Internet, you should probably still use a private address range within your intranet to add a bit of security to your network.

The Manage Your Server window reappears after you have completed the installation of the Windows 2003 Active Directory.

You can continue to add roles to the server, such as the ability to Manage Users and Computers in Active Directory. However, the management functions listed here can also be found in the Administrative Tools folder. You can go ahead and choose to continue setting up your server using this window, or use the Administrative Tools later.

If you want, you can now create additional roles for this server, or you can use other servers to set up other roles. Your decision should depend on what role you choose, and the capacity of the servers you will use. In a small to moderate-sized network, you might be able to use a single server to perform the roles you select. However, in an Enterprise network, you should carefully plan to install many servers to use for separate roles in your network. Indeed, if you use multiple subnets, you will have to consider how network traffic affects your network, and probably use servers on each subnet that are set up to perform specific roles.

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