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I have migrated a domain from SBS 2008 to Server 2012 R2, transferring FSMO roles, DHCP, DNS etc. The 2012 server is now a domain controller.

Exchange has already been decommissioned with mail migrated to Office 365.

Is it possible to demote the SBS 2008 server, but keep it on the domain as a file server?

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The Microsoft license for SBS does not allow that. You need to reinstall the machine with a regular Windows Server license.

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