Domain controller failed beyond the recoverable point. Now that we have a new server running WIndows 2008, would I need to recreate all of the users to join the domain for AD to work? What would be the best approach?
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If you don't have any backup and that was the only domain controller in the domain, then you can't recover it and you have to accept this fact; next time, you'll know why it's considered best pratice to have at least two domain controllers :-)
That said, the situation is not good at all: even if you re-create the domain from scratch using the same domain name, the new domain would still be a completely different thing from the old one (a domain is identified by much more than its name, which can actually be changed); there's no way member computers are going to recognize it: you'll have to remove them from the old domain and join them to the new one, even if they have the same name.
The same is tue for user accounts: the ones you create in the new domain will not be the same you had in the old one, even if their names and passwords match; so your users are going to get new user profiles when logging on to the new domain, and you'll have to re-assign permissions on every network resource.
And I seriously hope you aren't running Exchange, or things are going to get interesting...