This probably won't help you but ...
I have 2 SME servers setup, one is my gateway and the other is an internal server only (more for testing than anything else). To make it work, I set the work group for both to the same name and the gateway box is acting as the domain controller. I can see the 'domain' name in the windows network neighborhood and both server names in that domain. Setting users up is a pain though, to let everyone see resources on both boxes, I have to manually create the user lists on both boxes. This works for me because I have a small network. As I write this, it occurs to me that I haven't tried to update passwords to the SME domain now that it has 2 servers. Not sure if that'll work, I'll try it when I get home...
Now I have a question to add to the thread:
I'm told the term 'Primary Domain Controller' is a Microsoft only designation, is there a way to create the same functionality with SME? In other words, is there a way to make one SME server box act as a network/domain authentication server?