I have a total of 5 desktops connected through a Linksys BEFSR41 DSL Router, my question is I feel even though I have a hardware firewall, I do not feel that I am as secure as I think, should I look into a software option as well? also I am running an AD environment, I have a DNS server as well, should I setup the firewall on that server, or would I have to set it up on each machine?

If you have 2003 server with two NICs, you may want to install NAT/Firewall. For more tips or information, go to http://www.ms-mvps.com Robert, MS-MVP, MCSE and CNE Networking, Internet, routing & VPN Support, Tips and FAQs on http://www.ms-mvps.com

Set one up on each machine. That way, if you download a virus on one computer and it starts attacking the other computers, the other computers will be protected. Firewalls can't protect computers where the virus program was specifically asked for. your current set up is fine, if: 1. You're the only one who uses those 5 computers. 2. You're smart enough to know whether a file is suspicious or not (ie: download from here rather than there). 3. You have a good anti-virus software that is always updated and will be able to catch any viruses/worms that you download.