Active Directory is backed up when you backup the System State data on a server.  If you don't know how this works, I strongly encourage you to setup a test network and learn it by doing before you have major problems.

I have a web page that discusses backup and the towards the end there is a series of links with greater specific documentation on backing up Active Directory.
http://www.lwcomputing.com/tips/static/backup.asp

I need to know the best practice in the eyes of Microsoft.  Not just how to backup the system state.

Does Microsoft recommend certian software?  Do they have the step-by-step instructions?

http://www.microsoft.com/technet/prodtechnol/windows2000serv/technologies/activedirectory/maintain/opsguide/part1/adogd03.mspx

I need to know the best practice in the eyes of Microsoft.  Not just how to backup the system state.

Does Microsoft recommend certian software?  Do they have the step-by-step instructions?

BrightStor ARCserve Backup will be the best bet. Is your backup software (BrightStor ARCserve Backup) in the local machine (the machine which holds AD) or is ur backup server different and the DC different?

Let me know, I will give you step by step procedure.

Microsoft does not recommend specific software for backups, as they partner with numerous software vendors and (for reasons that should be obvious from a marketing standpoint) will not recommend one over another.  As long as your backup software is Active Directory-aware, it will allow you to perform a System State backup and restore.

If you are looking for additional Microsoft documentation, I recommend the following Support Webcast:
http://support.microsoft.com/kb/325560

http://supportconnect.ca.com/sc/kb/techdetail.jsp?searchID=TEC266831&docid=266831&bypass=yes&fromscreen=kbresults - This is CA's Doc

http://support.microsoft.com/kb/328150/en-us - This is Microsoft Doc

Both refer to windows 2000, but they still hold good for Windows 2003.

BrightStor ARCserve Backup and our backup server is different from the DC.

Please send the step by step procedure.

First install the BrightStior client agent on the DC.  

Go to the Backup Server.  Go to Backup Manager.  Under Windows NT/2000/2003 systems, add your DC and exapnd the DC.  It will now show the system state of your DC.  Backup the system state and you are done.

And if the backup server and Active Directory are on the same server?

If you want MICROSOFT information, READ the link I first provided - as I said, and to repeat myself:
I have a web page that discusses backup and the towards the end there is a series of links with greater specific documentation on backing up Active Directory.

Some of the links include MICROSOFT related documentation, including information from the Windows 2000 Resource Kit (which still holds largely true to 2003) titled "Active Directory Backup and Restore"

Microsoft is NOT going to recommend third party products in MOST circumstances - they'll tell you to use what they've provided - NT Backup and the System State  - as I said earlier.

Perhaps we could help you better if you explain what you are doing?  Are you trying to LEARN this in preparation for an exam?  Are you trying to backup your own network?  What are you doing?

If the backup server and active directory are on the same server, go to Backup manager, Expand  windows nt/2000/2003 systems.  The first server in the list will be the local server (i.e. your bacukp server).  Expand the server and backup the system state.

u can use the simple microsoft backup and backup the system state (schedual) and the the files from the backup u did, u can back up them to a tape using arcserve for a new job

I am trying to back up the active directory stored on the same server as the backup software.
I need to backup the active directory and place the backup information on another server in case of a disaster.  Also would it be 'best' to keep the active directory on its own server and the backup software on a different server or is it best to keep both on the same server, what does Microsoft think?  In a disaster I need to know I can bring up another server as the active directory quickly.  

I am not asking this in reference to an exam this is for practical use.  

More than Microsoft Recommendations, we need to look @ our environment and convenience.
As you are concerned about AD, I would suggest, you have the backup software on a different server and backup the AD using client agent.