Advice Setting Up Hyper V Enviroment

Never install other roles with Hyper-V. Either run a separate server for a DC, or make a guest VM for the DC as well. Not everyone is comfortable with virtualizing a DC so you'll get a variety of opinions on that front, but with 2012 and later my opinion is it is fine as long as you aren't running a cluster. But either way, there is consensus that having it coexist with the Hyper-V role is not a good idea.

As far as migrations, there are options there. Exchange will be the most difficult portion as there is no direct path from Exchange 2003 to the current version of Exchange. You'll need to use a 3rd-party migration tool or introduce a temporary Exchange 2010 server to facilitate that migration.

Any which way, it will be a "clean" install in that you can't do an in-place upgrade. Migrating data will be done after the OSes are installed. TechNet has migration guidance for the various roles and applications, such as migrating Active Directory, DNS, DHCP, Exchange, etc. You will not find a monolithic "here is how to migrate everything" document. You will instead pick and choose each role as you see fit based on your uses.

Ok It would probably be easier doing a fresh install then.

So are you advising either installing the hyper v role on the server and use that server as nothing else and Virtualize everything?

or just installing hyperv server core instead of the whole 2012 Operating system either or I suppose is fine?

Virtualize everything. In 2012, there is no longer a "core" or "full" as there was in 2008/R2. Now adding various GUI components is just feature that can be added and removed as needed. There are merits to running without the GUI for patching reasons. But there is also merit to having the GUI for management. So that is a personal decision. If you were asking about the free Hyper-V edition, I do see no reason to run that if you have 2012/R2 server licenses as their virtualization rights provide you with free use of the management OS as long as you abide by the virtualization rights and don't install other roles. The free version of Hyper-V is unnecessarily limiting in such a scenario. The only time I see using the free Hyper-V version now is if you only have licenses for older server versions (or plan on running just Linux) and want to take advantage of the latest Hyper-V features in 2012/R2. In those cases, you wouldn't have a 2012/R2 license to exercise virtualization rights, thus the free edition makes sense. But that is a small percentage of non-hosted environments these days.

And Raid 5 for the Vms?

I'm not a fan of RAID5 in general. But VMs, Exchange data, SQL....is rather pedantic at that point. You choose the storage infrastructure to fit your performance and resiliency needs. Just because it is Hyper-V doesn't suddenly change those basic rules.

I open to suggestions for Raid options from what I have read Raid 10 has possible slow Write issues?