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Raise the funcitonal level of a domain

We have a domain with various servers from Windows Server 2000, 2003 & 2008 R2.

We have two domain controllers
Primary DC 2008 R2.  Secondary DC 2003 R2.

The 2000 Servers are simply holding legacy applications and are not Domain Controllers.  

Our functional level of the domain and forest is set to 2000 Native.  

Are there any issues with raising the funcitonal level of the domain and forest to 2003?
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Darius Ghassem
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Only other aspect to mention is that we are moving torwards a full domain trust with our sister company.  Two seperate domains.

Their functional level is 2003 native thus we have to riase ours to enable the two way trust.
That would be the best option
How long does the process take to raise?  

I know not best practice but are there any issues doing this while users are on the system?
WHen you click "OK", it's done :] Your DFL is changed, up-and-running
The same for FFL

Krzysztof
No, this action does not affect users workong in the system. That process is transparent.

Krzysztof
Just to confirm one last point.

I have now raised the Functional level of our domain to 2003.  The forest is still set to 2000.

Will the trust now work?  

Just to clarify is there any issue to me simply raising our FFL to 2003 also?
Yes, trust will work. If your domain(s) in the forest have no 2000 DCs, you can freely raise also FFL to 2003. It's the best choice to get two-way transitive trust between these 2 forests.
 That's new feature implemented in 2003 AD when you use FFL at 2003 level.

So, if you do not use 2000 DCs at all and do not plan to use them, raise FFL.

Before you will be able to establish trust, you need to configure DNS first. One of these options is required to get it working:
1) Define Conditional forwarders in your DNS management console for the domain from another forest
2) Create Stub zone in DNS for that zone

And of course make sure that you can reach that network from your environment :)

Krzysztof