Active Directory, 2 domains or create a forest and add as tree?

You can keep the two forest seperate or merge the choice is yours.If they want domain name seperate then keep the forest seperate and you can create trust between forest if required to access the resources.If you want to merge refer below links.

http://blogs.technet.com/b/activedirectoryua/archive/2009/10/01/mergers-acquisitions-or-reorganizations-may-have-you-considering-active-directory-restructuring.aspx

http://social.technet.microsoft.com/wiki/contents/articles/13904.how-to-migrate-users-across-forest-cross-forest-using-admt-3-2-with-sid-and-passwords.aspx

Why do you want to put servers that are not well maintained or patched onto the same networking subnet as your well managed domain?

I'd say, for now, keep it as a separate domain.  Unless the two businesses are going to start working together soon.  Then, plan your next steps after the merger is completed, and decide based on what the business becomes.

They will not be working together.

Sandeshdubey, we currently only have one domain, no forest.

I was thinking about creating a forest and adding DomainB to it? I think we will be building a new DC and file/print server for them. So should not have infected/non-patched servers.

I'm Just not sure if we should join DomainB to the forest or keep them as a separate domain?

You can create new domain for domain B and migrate users/computers to get rid of old h/w which is having issue.You can keep them seperate and in future if required you can merge as per business requirement.

I have to say this whole things sounds like it needs to be revisited. As an MSP, you definitely do NOT want to have two domains under the same forest, or anything similar. You'll have a heap of legal issues, licensing issues, and more.

So with that in mind, even keeping them on the same subnet is a sketchy proposition. If the relationship is truly MSP/client, price your services accordingly to get them on their own network (go HaaS if need be) and manage their network as if it were their own (because it is) and not as a part of yours. Keep yourself legally protected.

Doing any portion of what you are currently considering is a very painful road. If for no other reason than the various regulatory requirements that are now a part of everyday IT.

And can they be on the same subnet?

Yes,you can have in the same subnet but would recommend to have different subnet.Also if dhcp in both domain then it could be an issue as in the same subnet you cannot have two dhcp server.

If I put the two separate domain on the same subnet but separated with v-lan would that work? Can I use two dhcp servers?

If the vlan is created and both cannot talk then it should be not an issue.

There are only 20 pc's if I use static IP's will this resolve everything?