I have always found that any Microsoft Active Directory network works best if all network workstations and servers are using one of the Active Directory controllers for DNS lookups. Whenever I don't configure it this way I end up running into odd local networking issues during the life of the network - maybe not right away, but before the server gets retired.
Also, I find the Microsoft DHCP server significantly more powerful and flexible than the one in SME.
I don't understand why you want to configure your SBS as a secondary DNS server for the SME - on most of my SME networks the only entries in the local host list actually point to the SME server itself; it wouldn't do much good to have a backup DNS server sending traffic to the SME if the SME itself had actually failed.
So, my recommendations would be:
1) Disable DHCP on the SME server, and enable it on the SBS
2) Configure the DHCP parameters to have all clients use the SBS for DNS
3) If you have custom DNS requirements, create a primary
zone in SBS for each off-site
host, then create an "A" record for "@" pointing to the off-site IP address. Or, if you need SBS to return SME-based DNS results, configure SBS to use the SME server as a dns "forwarder".
To more directly address your questions, however:
a) I think there's a way contrib available to allow you greater control of how SME talks to DynDNS. If so, you could rename your primary SME domain to match the SBS domain, then customize the DynDNS settings. This *has* to be easier than reloading SBS! Here's a link to a sonoracomm howto on sme7-ddclient:
http://www.sonoracomm.com/index.php?option=com_content&task=view&id=132&Itemid=32b) SME uses 'tinydns'. You'd have to figure out how to customize tinydns to allow zone transfers, then figure out how to create SME template fragments so that your tinydns customizations don't disappear when you reboot. Here's a not-very-specific-post on customizing tinydns:
http://forums.contribs.org/index.php?topic=32360.0c) As for the errors you're getting reserving hostnames - perhaps you would find some info in
/var/log/httpd/admin_error_log. Of course, if you move DHCP from the SME to the SBS this problem becomes moot.