Several folks have asked me if it is ok to install ArcGIS Server on a domain controller. The simple answer is no. The main reason is the GIS server uses local groups to control access and a domain controller does not allow for local groups. Another really good reason is that Microsoft says that you shouldn't use a domain controller as a server for IIS or otherwise.
http://www.microsoft.com/windows/windows2000/en/server/iis/htm/core/iisckl.htm (under specifically Do not use PDC as a server)