Are you looking to try to create your own domain network?
First thing you need is a domain controller. Windows Server 2000 or 2003 can be domain controllers. After you promote your servers to domain controllers and DNS is configured properly on the server, simply go to System Properties on the client computer (Windows XP Pro, can't be Home), click the Computer Name tab, click the Change button, click the Domain radio button, type in the domain name and click OK. You'll then be presented with an authentication box where you have to enter the credentials of a user that has the rights to add computers to the domain. For a test environment, the administrator on the server (or the domain admin) will be able to do this. After clicking OK and waiting about 30 seconds, you'll be presented with a box that will welcome you to the domain, click OK, restart, and when you're ready to login to the domain for the first time, ensure that you choose to login to the domain and enter the credentials of a user account that you created in Active Directory.
Generally, PCs in a domain environment don't have firewalls.
In the process of promoting Windows server to a domain controller, you'll be asked if you want to configure DNS.
For a small lab environment, you don't need a DHCP server (unless you want to play and learn with it).
In the background, a computer account is created in Active Directory when a computer is added to the domain. The computer account and the physical computer share a secure, "password protected" connection to ensure that another computer on the network doesn't "hijack" the computer account (possibly for malicious purposes).
