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Does the DNS server have to be installed on the domain controller?

When upgrading our NT domain to AD, does the DNS server have to be installed on the DC or can it be on another...

member server?

The DNS can be another DNS server. Technically, it doesn't even have to be a Windows DNS server. Any DNS system that will allow SRV records and dynamic updates should work. There are benefits of ease of use by using a Windows DNS server. Also, if you put the DNS on the Domain Controller you have the benefit of using AD integrated zones which releave you of having to manage zone transfers yourself plus allow for the use of Secure dynamic updates.

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