We discovered that users can't update Exchange 2000 Server Distribution Group (DG) membership from Outlook unless the user account is in the same domain as the Exchange server. Does this limitation exist in Exchange Server 2003?

This limitation isn't actually related to Exchange, it's related to Windows. DG membership isn't replicated to Global Catalog (GC) servers, so to update membership, Outlook (or any other tool) has to talk to a GC server in the domain in which the DG is homed. Regardless of which Exchange version you use, you'll need to arrange things so that the GC server your clients use is in the same domain that owns the DG.

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