Single Level Domains and Exchange 2007 service pack 1
Do you know what a flat domain is? Do you know what a single-level domain is? You may not even be aware that Active Directory supported single-level domains.
If you do - then you've probably run into problems with it in the past. Now there are more problems.
A flat or single-level domain is one that only has a single piece to the Active Directory domain name - often people make it similar to their NetBIOS name.
For example, my Active Directory domain is "essential.local". A single-level domain would be just "essential".
Well, Exchange 2007 sp1 (and later) will no longer support single-level domains.
This is documented in the README for the service pack (but who reads them?).
DON'T INSTALL EXCHANGE 2007 IF YOU HAVE A SINGLE-LEVEL DOMAIN.
Before you install Exchange 2007 you have the option of renaming your domain (Exchange 2003 supports rendom). After you've installed Exchange 2007 you can't rename your domain. And you can't install service pack 1 (or any later service packs).