Windows

Installing AD is the only way a Win2K server can become a domain controller (DC).

Further points:
1. A Win2K DC CANNOT exist in a NT4 domain.
2. To migrate a NT4 domain to a Win2K domain, Win2K (and AD) MUST be installed on the NT4 PDC.
3. AD requires access to a DNS which allows Dynamic Updates (which usually means setting up a local DNS server as most ISPs don't want you dynamically updating their DNS servers).

You pretty much have 3 options in your situation:
1. No migration - Create a Win2K DC and recreate user accounts from scratch (with the number of users you have, this will be your least labor-intensive option).
2. If your old server meets minimum hardware requirements for Win2K and the NT4 install isn't too messedup - Upgrade your old PDC to Win2K. AD installation will start automatically once Win2K recognizes it is being installed on a PDC. You may need to create a DNS server locally if you aren't currently hosting your own DNS (see point 3 above). Promote your new Dell server to DC by installing AD. Force replication of the domain and transfer all server roles to the new server. Demote old server and remove from the domain (if that is your ultimate goal).
3. If the old server can't meet hardware requirements or your NT4 install is hosed - (you'll love this) Remove Win2K from the new Dell box and install NT4 as a BDC. Force synchronization from the PDC to the BDC. Promote the BDC (new server) to PDC. Remove the BDC (former PDC) from the domain (to be used as a fallback in case the Win2K install goes south). Reinstall Win2k on the PDC (new server) (to include installing DNS if necessary).

(continued)

The answers Tim gave are correct. I only wish to visit the need for a domain currently when you only have 7 people connecting. Is this for any particular application that requries a Domain, such as Exchange? If not you may want to consider going peer-to-peer.

If you ar eusing Exchange you may want to research the possiblity of using the Small Business Server by Microsoft, SBS does have some limitations but usually these don't come into play for smaller domains (less than 50 users)

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