Is there software like VirtualPC or VMWare stuff that could be used to create a virtual domain network ??
Yeah, that's pretty much what you'd do.
Set up a bunch of VMs and/or decommissioned machines to create a test domain environment. If you use VMs, you need a pretty beefy hardware setup, or multiple servers to run enough guests to make a decent simulation. (And the proper licensing to run said guests, unless you want to rebuild the thing every 30 days. Look at the various MSDN licensing levels, which allow you to run a wide range of MS products, including operating systems, for testing or development purposes.)
And no, there's no software to do it automagically, you have to build it up manually. If there was such a product, everyone would replace their IT department with that software and save a truckload of money.