Domain controller Win2000 vs Win2003

There are no real disadvantages between Windows 2000 and Windows 2003 Active Directory services. Windows 2003 Active Directory Services is based upon W2K Active Directory services and has more administrative tools and functionality than W2K [because a lot of IT admins sent ideas into Microsoft on how to improve W2K which they incorporated into W2003].

The only major differences between W2K is that #1. W2K is nearing the end of it's lifecycle and hense support by Microsoft. #2. Windows 2003 Active Directory Services schema is different. Therefore addprep/forestprep and addprep/domain prep is required on all W2K Active Directory services before the introduction of W2003 server DCs.#3. Windows Server 2003 is not 3 years old and the next generation will be out in another 1 to 3 years.

note: you mention workgroups and then mention both servers are under 1 domain. Which is it? you can have workgroups and server members of those workgroups or you can have an Active Directory Services based domain that the servers belong to but you can't have the servers belonging to both at the same time.

Management wants to put the 2000 server under a different domain with a domain controller installed. My question is "Why?" Ideally you would want at least two domain controllers (more money) in each domain. Administration of everything related to two domains is obviously more (more money) than a single domain. Couldn't you provide what they think they want with directory rights and security groups and the infrastructure that Active Directory provides? Management needs to tell you what they to accomplish and let you as their consultant offer a solution. They need to let you do what you are being paid to do rather than paying you to do something that everybody will regret and wonder about later.
Win2000 and 2003 are a lot closer than NT and 2000 so from that perspective either one has about the same abilities.
Just because you can, doesn't mean you should.

Firstly, are either of them promoted to domain controllers with AD?

If it were my setup, I would create the domain on the 2003 box and eliminate the 2000 box completely....then I would convince management that it would be in their best interest long term to install another copy of 2003 Standard on the second system and make it a backup to the primary.

If you're short on budget, I would also use that second box as the web server and/or exchange server.

Personally, I find 2003 server easier to manage than 2000.

So, in my opinion, yes, it would be easier to "put all under one server and use the other as a backup."