How do you create a server environment?

-On the server, START>PROGRAMS>CONFIGURE SERVER
---Add Remove Roles
---Custom Option and Select Active Directory
---Follow the prompts and when the DNS section comes up, choose "Configure Options Later"

What do you have for DNS?  

The easiest way to do this is to create an AD account and set users profiles on the server you do not want to use; however, you can also configure each PC with the user name profile on their, but what ever changes 1 PC does it will not reflect the other; the work around is to have each PC profiles sync up with each other after hours.

Using XCOPY:

The Windows command line utility XCOPY has options that can be used to copy only files that are newer than those already in the destination folder. You can create a batch file to simplify this procedure.

Using Notepad, create a file containing the following two lines:
XCOPY "%1" "%2" /D /I %3
XCOPY "%2" "%1" /D /I %3
and save it in your Windows folder as SYNC.CMD. (This is for Windows 2000 or XP. If you are using Windows 95, 98 or Me, replace XCOPY with XCOPY32 and save the file as SYNC.BAT.)

To use the batch file, open a command prompt and type SYNC followed by the paths of the two folders you want to synchronize, each in quotes. If you want to synchronize subfolders as well, add /S to the command line before pressing Enter. For example, suppose your project is kept in a folder called "My Project" on both your local PC and one with a network name of "DELL". To synchronize this folder, including any subfolders, type the command:

SYNC "C:\My Project" "\\DELL\My Project" /S
We recommend that you test this on something unimportant before trying it on valuable work files. Note that the two-line batch file has no "idiot-proofing", so it will happily try to synchronize entire hard disks if you tell it to! This method works, but it gets tiresome having to type in the paths of the two folders.

OR

Use Windows Briefcase:
Most versions of Windows have a little-known tool called Briefcase that is intended to facilitate transferring files between work and home. One of the reasons it's little known is that it is not really a lot of use. It can't be used to synchronize files or folders across a network, but you can use it to create copies of files that can be transferred to another computer across a network, and then used to update the originals when they are transferred back. You can also create a Briefcase on a floppy disk or Flash drive, and then transfer it manually between computers.

To use the Briefcase:

Right-click on the desktop (or in any folder on any removable drive that you want to use to carry the briefcase) and select New, Briefcase. You can rename the new briefcase if you wish.
Transfer copies of the files you want to work on to the briefcase using drag and drop.
Transfer the briefcase to the other computer, by drag and drop across a network or by physically moving it on a floppy disk or Flash drive.
On the other computer, edit the files.
Transfer the briefcase back to the original computer.
Right-click the briefcase and select Update all. This will synchronize the briefcase files with the originals.

I am attempting to configure the server as a domain controller as suggested by lleblanc65.  But I do not know what to put in for the DNS.  The workgroup we use is WILLISAUTOGROUP and I wanted to maintain that as the domain; but I get a warning that states:

The name WILLISAUTOGROUP includes only one label.  Most names include more than one label separated by dots.  Example: domain.microsoft.com.  You should avoid using a single-label DNS name as an Active Directory domain name, since it requires additional configuration.

What does that mean exactly?

This means if you wanted to publish this name and use an internet reigstar such as GoDaddy you would not be able to. If you are only using this for internal use (which I believe you are) then this will be fine - or you can simply make it WILLISAUTOGROUP.COM and that will solve your problem. When you join the domain with the other pcs you will only need the single label as the ".com" is assumed in windows.  

Thanks for the info!  I'll give it a whirl and let you know when I run into another question!  :-)

Now I'm getting the following message:

DNS Registration Diagnostics - Verify DNS support, or install DNS on this computer.
Diagnostic Failed
The registration diagnostic has been run 3 times.
Warning:  Domain Controller functions like joining a domain, logging onto a domain, and Active Directory replication will not be available until the DNS infrastructure for Active Directory is correctly configured.
The wizard encountered an error while trying to determine if the DNS server with which this domain controller will register supports dynamic updates.
For more information, including steps to correct this problem, see Help.
Details
The primary DNS server tested was: a.gtld-servers.net (192.5.6.30)
The zone was: com
The test for dynamic DNS update support returned:
"DNS Sever failure."
(error code 0x0000232A RCODE_SERVER_FAILURE)
Options are:
1. I have corrected the problem. Perform the DNS diagnostic again.
2. Install and configure the DNS server on this computer, and set this computer to use this DNS server as its preferred DNS server.
3. I will correct the problem later by configuring DNS manually. (Advanced)

Any thoughts?

Where is your DNS?  

My setup is CLOUD>WALL JACK>MODEM>CISCO FIREWALL>SERVER

Server automatically picks up the DNS and handles it..

Are you still staticed on DNS or is your Server DNS set to 127.0.0.1

run DCPROMO to remove active directory then run it again to add it
DCPROMO will offer to configure DNS for you, say yes and go to lunch
Once you finish lunch the DCPROMO should be done and ready for rebooting, then you'll have a working set of zone files. I've seen an Active Directory zone file, you'll never get it right making it by hand.

Are you referring to DNS in TCP/IP Configuration?
If so, those servers are set to:
209.137.160.3
209.137.160.7
as specified by our ISP

Reccomend you remove the static DNS settings and use DHCP for DNS.

Then take the advice above and remove AD and Reinstall using the custom configuration selection choosing AD from the list.   When the part about DNS comes up, use the "Confirgure these options later...." .   After the reboot the server should automatically handle the DNS.   All the WS on your domain should automatically point to the server for DNS also.

Note you can also Remove AD and DNS using the same server configuration manager.

What is your path to the internet?

ISP --- WALL JACK --- DSL MODEM --- SWITCH (Or Firewall then switch) --- SERVER

Do you issue DHCP to your workstations?  If not, once you sort this out, you can add DHCP as a server role and it will issue it for you.  Note if you do this, make sure you diable DHCP on switches or anything else.   Then you WS will auto point to the server for DNS.

Ok... so I think I've got Active Directory installed and operational and I've created one user and one shared folder for the roaming user profile.

Now I need to know how to copy the existing user profile (from the local Windows XP machine) to the roaming profile shared folder.  And then to set the Windows XP machine to access that roaming profile upon logon.

Thanks!

Correction:

I now have successfully copied and created a roaming profile.

However, there is a problem.

Everything copied to the server and copies from the server to the local machine each time the user logs on!  I've read some articles on how to handle large user profiles.  One provides instructions on how to "re-direct" user folders in Group Policy Editor.  I've followed those instructions precisely, however it does not seem to be working.  Everything (Desktop, App Data, etc.) is still being copied from the server to the local machine.

How do I make it so the local machine will simply access the files on the server rather then copying them on logon?

No experience with roaming profiles.