I have a BDC set up as my SMS server, and it works fine. It actually is really good for Logon discovery if you choose to use that method. I haven't seen any communication issues with itself.

You could run SMS on a BDC or a PDC if you want, however; I don't think you would really see much of a difference.  The SMS Logon Point has nothing to do with the domain validation of a DC. Yes it would do both, but one wouldn't benifit the other.  Also, unless the SMS server is the only DC in your company, only the clients that validate to it would see any benefit.  As you can't control which DC clients validate to, it is doubtful you would notice any difference.  
If you are thinking about automated client discovery and the SMS server discovering clients as they log on, you might see some increase in performance if the BDC/PDC is the only DHCP server (Using the DHCP discovery method in Network discovery),however; as it is unlikely you have only one DHCP server, you most likely wouldn't notice an improvement here either.
The other issue that comes to mind is the SQL database.  Although you can run SQL on a different box (v7.0) than the SMS server, any performance increase you might have received from the DC you would most likely lose as the SMS server has to communicate with the SQL box across the network.  You could choose to run SQL on the DC, but then you will have major performance issues relating to the SQL server.

Thank you danoh .. thank you rmack!

I guess the problems i had stemmed from the fact Windows Network logon discovery and installation were my discovery and installation methods.  And with that, all the DCs are made site systems (logon points)

Once they are site systems, you can no longer use them as a secondary site server (as they are site systems in the primary site)

Well the good thing is, the server crashed and i lost everything .. had to restart .. this time, didnt use Windows Networking Logon Discovery or installation .. and im happy to say .. all my other DCs are left alone.  They are not made site systems and i can now use them as secondary site servers!

Thanks guys!

You are correct when you enable Windows Networking Logon Discovery all DC's in the SMS domain will be configured as SMS logon points, however; you can upgrade a DC to a secondary site even after is is a logon point. Also, if you don't enable Windows Networking Discovery you won't be able to install SMS through logon scripts.
One other thought; if you have multiple domains you could configure SMS for only one of them.  Then SMS would only configure that domain, leaving the others alone.
What problems were you having and what are you trying to do?

Hi again Danoh

Well i had great difficulty turning a logon point into a secondary server, and i concluded its an impossible task.  As soon i insert the installation CD, it says the server is a site system of another SMS site and hence, all it enables me to install is the admin console, everything else is grayed out.

As for disabling Win Network Logon Discovery and not being able to install clients via logon script - well that's fine.  My new install has both those disabled and the clients are installed via Win NT Remote Client Installation.

I would like to hear from anyone who had Network Logon Discovery enabled, had all the DCs turned into site systems and was able to turn one of the DCs into a secondary site server -  just so i can confirm that it is possible, if it is.

In anycase .. my new SMS installation is behaving well and doing everything the way i want it to. <fingers crossed> :)

Hey Lola,
It is possible to install Secondary Site server on a site system.  I did it in the lab but not in the way you tried.  I posted test results to your other post.  Basically the only difference is that I initiated the Secondary Site install from the Primary Site server, over the wire install.  You say that you tried to install Secondary from cd-rom mounted locally.  I did not do this.  If you are concerned with bandwidth, you can initiate the install from the Primary and use the local media as source.

Donah, you are close again.  You can use an install script to install clients with only the "Windows Network Logon Installation" method enabled.  This creates the necessary smslogon points that are required for this install method.  This method is also highlighted in Lola's other thread.