Windows 2000 and 2003 require that you run a DNS server on your network, it can be the local machine or another machine. you also must have an NTFS partition too.

The best way to do it would be split-brain (split-horizon for the *nix peeps). Essentially, you setup your box as a DNS server for your home domain (such as "whatever.com"). Now, you setup the box (server1) and its domain suffix (computer properties, and then computer name) to the same suffix for now. so, you have server1.whatever.com, and you can now install DNS on it. Setup your first zone to support "whatever.com" if that's the domain name you want, and then populate it with any hosts (other computers), delegations (other subdomains with other DNS servers), aliases (alternate names for existing records, such as "www" being an alias for "server1.whatever.com" if that box is going to be the www server), and MX records (mail servers) that you want. Make sure that it does not support dynamic updates for now, and then test it by pinging the records. Remember, the server *NEEDS* to point to itself as its primary DNS server, and make sure that there are no other servers for it to point to in its network TCP/IP properties. Next, once those tests are done, set the forwarders for the server to point unknown DNS requests (such as www.microsoft.com and www.ntcompatible.com) to your ISP's (or any accessible DNS) server so it can pass off requests for unkown domains and their hosts. Also, if this system has multiple NICs, make sure to have one for the LAN side and one for the WAN side, and assign the DNS server to *ONLY* respond to DNS requests from the LAN side (unless you plan on hosting your own name in the real world) for security and bandwidth's sake.
 
Another good source of info on AD and (D)DNS would be Mark Minasi and just about anything he's written for 2000 and 2003 Server.

so basically i just make up a domain name that i like and use that