Is is better to install Exchange Server on a Domain Controller or a Member Server? The answer to this question has a lot of answers, for and against!
Install on a Domain Controller:
As Exchange needs to authenticate clients, it is better to install on a domain controller to reduce the amount of time it takes to authenticate.
Install on a Member Server:
Exchange is an application, and does not need to be on a server that participates in domain replication.
The Answer:
The preceding was copied from - and for the (his) answer - see the following link:
http://www.outlookexchange.com/articles/colinjanssen/Install_DS_or_MS.asp
or
http://tinyurl.com/aicz
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Personally, I prefer the mail server to reside on a member server, not a domain controller. Authentication time is not (usually) an issue, and I want to give all the resources available to both exchange as well as my domain controllers.
So my vote is a dedicated member server.