Question : Can I set up a domain workstation offline?

I'm taking over from a former system administrator on an SBS 2003 system and have little idea of where things were left and virtually no experience with SBS domains.

I am trying to hook up a new WIN7 workstation for the dept. director. This machine was worked on to some extent by the previous sysadmin.

I booted the WIN7 workstation offline to be safe. I was not able to log in with what the director thought was his login and password, but I was able to log in using the SBS Asministrator login and pw. Two things:

I got a screen saying that Windows was not activated and asking if I wanted to active now. That screen eventually went away and the desktop appeared, but a message persisted in the lower right-hand corner of the desktop saying that this was not a legitimate copy of Windows. Supposedly, this workstation was running in the LAN for a week or so before being pulled for unrelated reasons. So, whats' up? Does the workstation *need* to be connected to the domain controller? Is is possible the former admin was reinstalling WIN7 and didn't get a chance to finish?

Item #2: No users appear to be configured at all when I look at control panel > users. Is this normal for a domain workstation? I've noticed that all users seem to appear on other workstations with their localdomain a la: domain\user. But these workstations also appear to have simple users configured with login and the local machine name.

I've never hooked a workstation to an SBS domain before. Guidance at this point would be greatly appreciated.

Answer : Can I set up a domain workstation offline?

Sorry, attached wrong file. Here's the image.