I have a very small domain, one PDC and 50 clients. I would like to replace the PDC with a more powerful PC. Is best practice to create the new PC as a BDC, replicate, demote the current PDC and then finally remove it? I fell 100% that I am correct, but would like some feedback on this. Thanks

You are 100% correct....for NT but not W2K or 2003 server. This is because there is no comparison between NT pdc/bdc and w2k/03 server peer to peer server relationship. Just as in the days of NT you have a pdc and bdc for authenication load balancing and sam failover, so also you should have two 2003 servers. Both should have the global catalog and both should be ad intregrated dns or primary on one and secondary dns on the other. This is for failover and authenication load balancing. A NT pdc/bdc is created during install. W03 creates a DC from running dcpromo. You better have your dns configured correctly and plan you AD tree.

Then what is the proper way to upggrade the current PDC on a Windows 2003 network? The network is just for home use. Why could I just not create another DC running DCPROMO then reemoving the original PDC? A different solution perhaps; remvoing the harddrives of the current DC on the 2003 network and installing them on the new PC without removing the operating system or anything else?

There is no PDC. You have a DC that has the fsmo role of pdc emulator. You can't move the drive from one server to the other. Different hardware = different hal.dll In a nutshell in install 03 server. You run dcpromo and make it a dc. You xfer the fsmo roles, global catalog, DNS and AD services. At which point you can decide if you want to dcpromo down and off the other server or have it on the network as failover [if you follow the config suggestions in my post above] Any 2003 server book will walk you thru this.