We have heard from customers who tried to install Exchange 2007 RTM for the first time in their environment and then encountered setup failures either because one or more domains in the forest did not have a Windows 2003 Service Pack 1 Domain Controller / Global Catalog (DC/GC) server (these domains typically only had Windows 2000 DC/GCs) or one or more child domains in the forest were not reachable. In both cases, when Exchange 2007 RTM setup is run for the first time or when the Administrator attempts to prepare a domain for Exchange 2007 by running setup.com /PrepareAD or setup.com /PrepareDomain, setup would fail and the Exchange Server Setup Progress Log would contain information which would be similar to the following:
[5/29/2007 5:51:49 PM]  [ERROR] Domain child.contoso.com is not currently reachable. Please verify the connection to this domain and run PrepareDomdain for this domain again.[5/29/2007 5:51:49 PM]  [ERROR] No suitable Domain Controller was found in domain ‘child.contoso.com’. Errors:
Domain Controller ‘DC1.child.contoso.com’ Operating System version is 5.0 (2195) Service Pack 4. The minimum version required is 5.2 (3790) Service Pack 1.
Domain Controller ‘DC2.child.contoso.com’ Operating System version is 5.0 (2195) Service Pack 4. The minimum version required is 5.2 (3790) Service Pack 1.
For unreachable domains, this typically happens when setup tries to read the SID of the Domain Admins group from each of the child domains that only have Windows 2000 DCs. Since the membership of the Domain Admins security group does not get replicated to GCs, setup needs to contact a DC in that domain and it fails if it determines that the domain is unreachable.
For domains that are reachable but only have Windows 2000 DCs, setup fails when trying to add the ACEs on the Domain Container and the Microsoft Exchange System Objects container for the Exchange Servers Universal Security Group.
With Exchange 2007 Service Pack 1, this behavior will change. When Exchange 2007 SP 1 setup is run, it will be allowed to proceed even if it finds no suitable domain controller in other domains. SP1 setup will require a Windows 2003 Service Pack 2 DC/GC in the domain that setup is being executed from, but all other domains are not going to be checked for this requirement. You will however need to ensure that you have at least one Windows 2003 SP 2 DC/GC in every domain that needs to be prepared for Exchange 2007 SP1 at the later time (in other words – if you need to run the Exchange 2007 /preparedomain setup switch). All other domains could contain only Windows 2000 DCs/GCs.
Microsoft, Exchange, Server, Exchange Server 2007, Exchange 2007, RTM, Exchange 2007 RTM SP1, SEtup
Source:→ Exchange Team Blog