What's the best way to virtualize an existing SBS 2003 server?

I would get a basic ESXi box going and stable. Then use a product from Vmware called "Converter" You would boot the physical SBS server from a cd-rom with converter in it, and it would copy the system to the ESXi box as a virtual machine. Most of the time is really is that simple!

I would agree on the putting it on ESXi but make sure the system in on the VMWare HCL.  Since the max memory on the SBS 2003 Server is 4GB you can get away with running 6-8GB RAM on the ESXi box

you need a product that can image/copy an install to another hardware profile.  VMWare converter may well do the trick if you go to VMWare, but other options exist (mostly paid - at least that I know of) - these include DoubleTake, Acronis, and ShadowProtect.

I've actually used BESR, Acronis,etc.. quite a bit and you can install the trial version to do the image.  VMware converter can P2V the physical server (recommended) or it can convert any of these imaging apps via vConverter.

I would also recommend taking the SBS Server off the network and connecting to the ESXi host directly via crossover cable or standalone switch.  This prevents any updates of workstations so that when it comes up it's on the same ticket# as the workstations.

All great suggestions, however, each of you are missing a key point...  SBS2003 insists on being the domain controller and holding all FSMO roles.  There is some concern that the VMWare converter standaole 4.1 application may very well push the files over, but that the NTDS.DIT file will be in a corrupted state.  From what I understand, there are better tools available than 'converter' to create the image on a live, available, running domain controller; however, as I do not have access to them, and as I don't really want to mess with "unsupported" trial versions, I believe the key to this process is:

start the SBS2003 box in "domain services restore mode".

Active Directory will be in an "offline" state, and as such, will not be prone to corruption of the Active Directory database.  I will ensure that Exchange and other system services have been shutdown accordingly.

Thank you for your input, all.  It is very much appreciated.  I am interested in garnering your feedback centric to this Active Directory problem.

Regards,
Pantz

As written you are incorrect (maybe you mis-typed)

"SBS2003 insists on being the domain controller and holding all FSMO roles"
Correctly, SBS 2003 insists on being A domain controller and holding all the FSMO roles.  You can have as many DCs as you like, but the SBS box must be the FSMO master.

ShadowProtect and DoubleTake (and frankly, probably the others) are COMMONLY used in Disaster Recovery scenarios.  Zenith Infotech's BDR device virtualizes failed servers by using ShadowProtect as a form of Disaster Recovery.  DoubleTake can do likewise.

I don't have experience with VM Converter, but I wouldn't be surprised if it worked just fine.

The short of it, virtualization does not destroy the source.  You can test this first and then do it for real.  (Just be careful mixing your test environment with your production clients).

I have done this hundreds of times. I use converted to copy the physical to virtual with the machine off. I never once have had any kind of corruption. The transfer either works or fails. It really is a simple process. Depending on the amount of data to transfer and the network, and assuming you have data amounts similiar to what I see, you can count on about 4 to 8 hours or machine copy time.

Booted the server in directory services restore mode, ran the VMWare converter, and everything went well.  Thanks for the input.