When I try to install VMWare server on a domain controller the installer says that it's not recommended? Why?
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DCs have the disk write cache disabled. This will probably cause quite a bit of performance degradation to any hosted VMs. I would really recommend against it.

Neobyte
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Another reason is that if it dies or the VM chokes, your in quite a bit of trouble.

skitzot33
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This reasom means that no critical service can be ran on a VM. – FerranB Jun 02 '09 at 10:48
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Essentially, it implies that critical services should be one to a machine, and you should have a dedicated VM host to run your VMs on. This is why things like hyper-v and vmware ESX are so popular. – Matt Simmons Jun 02 '09 at 12:30