1. You cannot do an in-place upgrade of Exchange 5.5 to Exchange 2003.
2. Exchange 2003 is the ONLY version of Exchange that can run on Windows 2003.
To upgrade from Exchange Server 5.5 to Exchange Server 2003, you must first introduce an Exchange 2003 Server into the Exchange 5.5 site, and then move Exchange resources such as mailboxes and public folders to the Exchange 2003 server. You can use the Exchange Server Deployment Tools to migrate from Exchange 5.5 to Exchange 2003.
I also strongly recommend against running Exchange on a domain controller. First, both Active Directory and Exchange are resource-intensive applications. Putting them both on the same box means that they will likely fight each other for resources. Second, it means that your Exchange admins now need to have local administrative rights on your domain controllers, which effectively makes them domain admins (and gives them a much higher level of privileges than they actually need). Third, a security bug that compromises Exchange could put your Active Directory at risk (if I compromise an application running on a DC, there is a good chance I will be able to compromise the DC, too).
This was first published in November 2003