How to set up a Windows Domain with clients on a virtual server using VMware

At some point you may want to set up a Windows Domain for educational or research purposes.  For example you may be a student studying Windows Server and Network Administration, training for a certification exam, or experimenting with servers, networking, Active Directory, Group Policy, etc.

With the advent of virtual computing, a single computer can be pressed into service as a host for multiple virtual computers running Windows Servers and Windows Clients – a Windows Domain in a box!  The project cost can be kept low by using available hardware, free virtual server software from VMware and free trial Windows Server software from Microsoft.

Here is a diagram of an example LAN with a VMware host and client and the functions of each:

VMware diagram. LAN with a VMware host and client.

The virtual machines are accessed from a PC on the LAN with a utility called “VMware Infrastructure Client” that allows a remote desktop window for each machine to be opened.

3 windows cascaded. Left to right, the VMware Infrastructure Client to manage the VMware server and virtual machines, the desktop for a Windows Server 2003 and the desktop for a Windows XP Pro client.

The project has 3 steps: 1) acquire the virtual host computer and install the virtual computing software, 2) install Windows Server and client operating systems and 3) promote the Windows Server to Active Directory.

In my discussion I’ll be using a MSI P6N computer (with a Fujitsu Siemens MS-7350VP motherboard), VMware ESX Server 3i virtual server (hypervisor) software, Windows Server 2003 and Windows XP and Vista clients.  In addition to describing my project, I’ll mention alternatives for the host hardware, virtual server software and servers and clients.  In this case I choose this combination of hardware and software because it is what I had and emulated a scenario that I wished to study.

The first step is to get the PC or server hardware that will run the virtual computer server software (VMware ESX Server 3i).  VMware is designed for a business class environment with substantial hardware, for example SCSI disks, Opteron/Xeon processors and business class NICs.  VMware hypervisor versions include 3.5, 4 and 5.  ESXi 3.5 is most forgiving and will run on some low end white box PCs with SATA disks, Pentium processors and other NICs.  Fortunately for me VMware ESX Server 3i version 3.5 works on my low end white box PC – MSI P6N computer with a Fujitsu Siemens MS-7350VP motherboard.

Two good sources for hardware compatibility are and

VMware allows one to register and download the virtual computing host software for free, thank you VMware.  Versions 3.5, 4 and 5 are available at as well as a rich variety of documentation – guides, compatibility, configuration, tutorials and discussion communities.  Download the iso and burn a CD.  Boot the CD on your host computer and install VMware.

Alternatives.  A real server (with Opteron or Xeon processor and SCSI disks) is more likely to be hardware compatible and run VMware and you can find old servers for cheap.  Realize that old servers like rack mount ones are big and noisy.  There is other virtual hosting software available.  Microsoft offers Hyper-V, also a free download.  VMware and Hyper-V are bare metal hypervisors that run on the hardware and host virtual computers.  There is a second class of virtual hosting software that runs on an existing operating system and hosts virtual computers, for example Microsoft Virtual PC 2007, VMware player and VirtualBox, which are all available for free but each have quirks so I recommend going with a bare metal hypervisor if possible.  More on hypervisors at

Next you’ll want to plan your IP addresses.  Use fixed IPs outside of the DHCP range of your router.  If your LAN uses 192.168.1.x I suggest something like:     VMware host     Your first Windows Server     Your first Windows Client

With VMware Server 3i installed and running, you’ll want to configure it with a fixed IP address.  Note that the monitor attached to your VMware host is a console for VMware only – you cannot access the virtual machines from it.

VMware Server 3i console. Note this server is configured with a static IP.

At this point you can <F2> Customize System with a static IP and root account password.  <F12> to Shutdown/Restart.

Note that the console screen says “Download tools to manage this host from: (STATIC)”  Connecting to the VMware Server IP with a browser and get this screen:

VMware ESX Server 3i Welcome

Note the link “Download VMware Infrastructure Client,” go ahead and download and install the client.  Start the client and log on – enter the IP address of the VMware host, User name “root” and the password that you configured or leave it blank if you didn’t.

VMware Infrastructure Client logon screen

When you log on you may get a certificate warning.

Now you see the VMware Infrastructure Client management screen:

VMware Infrastructure Client management screen

Here you can create and manage your virtual machines, such as Windows Server, Windows Clients, etc.

The second step is to install the guest operating systems (like Windows Server, 2003, 2008, R2, Windows Clients like XP Pro, Vista Pro, 7 Pro).

Microsoft generously offers free trials of their Windows Server products and other products, available at  You will need to create an account.  Download the .iso images.  You can burn CDs or DVDs of the iso images or copy iso images to the VMware server.  I like to copy the iso disk images to the datastore of the VMware server (Configuration tab > Storage > datastore1 > Upload File…)

Datastore dialog, note the Upload Files… button on the tool bar.

During the Create a new virtual machine dialog, you pick the parameters like machine name, resources used (like cpu and memory) and more.  The Edit Virtual Machine Properties allows us to Connect at power on to an iso in the datastore so that we can boot from it to begin the install:

Virtual Machine Properties edit page showing “Connect at power on” a datastore iso.

You can also install from a CD/DVD on the client device (PC that you are administrating from) or the host device (VMware host) but my experiences are not as good as just moving the iso to the datastore.

Here are some keyboard combinations you really need at this point.

Pressing right <Ctrl><Alt> allows the mouse pointer to escape the client window.  Note that after Windows is installed, you can “Install/Upgrade VMware tools” which allows the mouse pointer to freely enter and leave the VMware client window.

<Ctrl><Alt><Insert> sends a <Ctrl><Alt><Del> to the virtual machine.

You can install Windows Client operating systems like XP, Vista and 7 in a similar fashion.  Note that you need the “Pro” versions if you want them to join a domain.  You’ll need an install disc of each OS that you wish to install.  I like to rip the disks to an iso and copy the iso to the virtual host datastore.  With Vista and 7 you can run for 30 days without activation, and you can “rearm” 3 more times for a 120 day trial.  You can also install Linux and other operating systems.

Windows XP is trickier to install because it does not have SCSI drivers included.  You must find the SCSI driver for XP and copy it to the datastore as a flp file.  During the initial install press <F6> to install a 3rd party or SCSI driver then connect the virtual machine floppy to the datastore flp file.  Here is a good resource for this issue: The combination of SCSI Controller 0 LSI logic and WinXPSCSI.flp worked for me.

The last step is configuring your Windows Server as a Domain Controller.

Here are some recommendations for setting up your local Active Directory, DNS and DHCP, based on my experiences and the very good tutorials at and this post

My test network consists of a SOHO router, VMware server and a Windows 7 client.  The VMware computer hosts the following virtual machines: Server 2003, XP Pro and Vista Pro.   For simplicity I wish my SOHO router to continue to be the DNS server,  DHCP server and Internet gateway.  Active Directory requires that the Windows Server be a DNS server for the domain.  The easiest way to configure all this is to give the Windows Server a fixed IP address and point its Preferred DNS server to itself or

Give the Windows server a name like “server1.”

Configure the IP settings:  set the IP address to the fixed IP that you chose, Subnet mask as appropriate, Default Gateway to your router IP and Preferred DNS server to the IP address given to the server or

Run dcpromo.  Domain controller for a new domain, domain in a new forest, full DNS name (use something like domainname.local, avoid using .com or .loc), accept NetBIOS name, accept recommended folders, DNS diagnostics will fail, that is OK, Install and configure DNS server on this computer, Permissions 2000, enter restore password, next, Active Directory Installation Wizard runs, Finish, restart.

Active Directory is installed. Note the new Administrative Tools: Domains and Trusts, Sites and Services, Users and Computers.

Now you should have a functioning Windows Server with Active Directory installed.

Time to add accounts and client PCs.  Enjoy.

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