Better to virtualize domain controller?

Question

I don't pretend to know much about this other than a very basic understanding, so please bear with me.
We've purchased a new server that we'll be using exclusively for hosting RDP for two clients. Each client will have their own virtual server. We're struggling a bit though trying to decide where to put the domain controller.
There are two things we're considering:
1. The physical server runs ONLY a Hyper V role doing nothing else and we load up a 3rd virtual server that will act as the domain controller for the other 2 virtuals.
or
2. The physical server runs runs the Hyper V AND acts as the domain controller.
The guy loading up the box is suggesting the first option. It seems to me, however, that we're adding another level of "stuff" with the domain controller being a virtual rather. My thinking is that everything has to eventually go out through the
operating system on the physical machine. Making the domain controller another virtual rather than the operating system on the physical box, adds another step where things have to go through the virtual DC THEN out to the physical box.
One of the arguments for the 1st scenario is that we can allocate resources to it more easily if the domain controller is virtual. I also like the fact that if the domain controller goes to crap, its just one file that needs to be restored and we're up again.
He also brought up the fact that the virtual DC could be restarted (after updates, for instance) without having to shut down the other 2 virtuals. Whereas if the DC is loaded on the physical box then the other two viruals would have to be shut down before
a restart of the DC could occur. However, I'm not sure that stuff outweighs any performance loss that might occur going through (what I'm perceiving as) the extra step of a virtual DC.
Any insights would be GREATLY appreciated.
Thank you,
Ken

Answer 1

Gosh Chris, thanks for all the information and insight.
I want to configure virtual domain controllers and a file server. Based on your discussion, here's my plan--
Host 1:
1 disk (not connected to RAID controller) for host / management OS
running Hyper-V Server core (free) or Server 2012 core
remaining disks configured into RAID array for virtual machines
Virtual Disk 1 - Server 2012 OS Domain Controller - root of forest
Virtual Disk 2 - shared files
Host 2:
Host / management OS is either Hyper-V Server or Server 2012
Virtual domain controller - replicating with Host 1 domain controller through Active Directory
Software requirements:
2 licenses of Server 2012
1 license of Windows 8 (for management workststation)
Hardware requirements:
2 servers
1 management workstation
Desired outcome for redundancy:
In the event Host 1 went off-line either because of Bad Things happening or hardware upgrades, Host 2 could step in and serve as domain controller. Further, I could reattach the virtual disk from Host 1 to Host 2. If Host 1
virtual disks are not available, I could restore the shared files virtual disk file from a backup of Host 1 / Virtual Disk 2 to Host 2.
Concerns:
1) Whether to put the hosts in the domain.
Excellent article at from the Virtual PC Guy blog at blogs.msdn.com on the "The Domain Controller Dilemma. With one administrator and a small network, it seems easy enough to create a workgroup for Host 1 and Host 2, and create local administrator accounts
for each hosts.
2) Windows 8 Client Hyper-V for management.
I would use another workstation running Windows 8 with Client Hyper-V. Would I have access to Host 1, Host 2, and their associated virtual machines? If I had access to Host 1 / Virtual Disk 2 (the shares on the file server), could I attach it to Host 2's
virtual machine?
Any holes or gotchas?
Thanks.