Migration Step Eight: Raising the functional level of AD
c Raise the functional level of the Active Directory domain and forest. Follow the instructions on pages 12 through 14 in the Microsoft migration document.
To be fair this probably should have been done sooner in the steps, but it's still in the prelim phase and before we've started the install of SBS 2008 so we're still during the time phase appropriate to this.
Download details: Windows SBS 2003 to 2008 Migration Guide:
http://www.microsoft.com/downloads/details.aspx?FamilyID=52b7ea63-78af-4a96-811e-284f5c1de13b&DisplayLang=en
On page 12-14 of that document is the instructions to change the functional level.
To raise the functional level of the domain
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1. On the Source Server, click Start, point to Administrative Tools, and then click Active Directory Domains and Trust.
2. In the console pane, right-click the domain for which you want to raise the functional level, and then click Raise Domain Functional Level.
Note
The current domain functional level is displayed in Current domain functional level, in the Raise Domain Functional Level dialog box.
3. In Select an available domain functional level, click Windows Server 2003, click Raise, and then click OK in the warning dialog box.
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Now we do the forest....
To raise the functional level of the forest
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1. On the Source Server, click Start, point to Administrative Tools, and then click Active Directory Domains and Trust.
2. In the console pane, right-click Active Directory Domains and Trusts, and then click Raise Forest Functional Level.
Note
The current forest functional level is displayed in Current forest functional level, in the Raise Forest Functional Level dialog box.
3. In Select an available forest functional level, click Windows Server 2003, click Raise, and then click OK in the warning dialog box.
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Read the complete post at http://msmvps.com/blogs/bradley/archive/2009/11/07/migration-step-eight-raising-the-functional-level-of-ad.aspx