Fran,
The DC's pointing to themselves can create a situation where they're like
two separate islands. If the records become stale they could each
essentially lose track of the other and stop replicating. In a small
environment it is best if two DC's point to the same one for DNS. That
said, you could leave it like it is an may never have a problem with it,
just not a best practice.
As for the GC promotion, it's pretty simple and straightforward and can be
done during production hours, but I would hold off on making any significant
changes to your AD while the promotion is happening. Once you check the box
to make the new server a GC, it will write an event log entry (I'm thinking
1119, but I might be off by a number or two) that basically says it has to
wait for five minutes to secure the directory. Once it's done with the
promotion it'll log an 1120 (again, the number might be reversed or off by
one or two).
You can check to see who holds the FSMO roles by running the following
command on any DC "netdom query fsmo" it will show all five roles and who
holds them. To transfer the roles, you can follow this Microsoft KB
article:
Windows 2000:
http://support.microsoft.com/kb/255690/EN-US/
Windows 2003:
http://support.microsoft.com/kb/324801/EN-US/
Or, if you really want to demote the existing server, running DCPROMO to
demote it will initiate the transfer of each FSMO role to any available DC.
I would caution you about running a domain with only one DC. It leaves you
with no form of online backup for your AD and provides no redundancy for
authentication of users if your DC fails. Worst case, if the old DC is in
bad shape, rebuild it from scratch, give it a new name and then promote it
back into the domain as a new DC.
Let the new one do all the work, but have some kind of backup online.