why would you not put it on the DC? I currently do not have a choice, but will be adding a few more servers to the forest over the next few weeks, and could possibly use one of the fileservers, if need be
where are you suggesting I use the loopback Ip?
also, this problem has gotten worse as more users are getting on it, it is now dropping connection to the AD user list about once every few hours, does that narrow the problem down at all?