So, are you planning to upgrade to Windows 2000 and Active Directory? If you are not, I would strongly recommend that you take this machine off of the network and put it on it's own isolated network segment for testing.
What you want to do is run DCPROMO on the Windows 2000 server, when you are prompted to type in your domain name in DNS form, type in what you want it to be. When you get the error message of CANNOT CONTACT A DYNAMIC DNS COMPLIANT SERVER, click OK and then have DCPROMO install and configure DNS on your local machine. Before you do reboot your machine, you will have to go into the TCP/IP properties of your local LAN connection, and put in the IP address of your local machine in the DNS Primary and Secondary Server settings. Save this connection, then reboot. You will have AD installed correctly. You can then procede to install Exchange 5.5 and the Active Directory Connector.
If you need further help with this, PM me or post back.