We want to make people aware of guidelines we have published for installing Active Directory on Windows Azure Virtual Network at http://msdn.microsoft.com/en-us/library/jj156090.aspx. This topic covers the differences between installing AD on Windows Azure versus a traditional AD deployment on premises. For example, you should not set a static IP address on the VM that you plan to make a domain controller when you install AD on Windows Azure. Instead, let the VM obtain an IP address automatically (which will be set by default) because on Windows Azure, the IP address lease is valid for the duration of the deployment, similar to a traditional DHCP reservation. There are some other important differences too, all covered in the guide, but that one comes up frequently.
There are also tutorials available, including how to install a new forest on Windows Azure at http://www.windowsazure.com/en-us/manage/services/networking/active-directory-forest/. The tutorial shows how to install AD on Windows Server 2008 R2 currently, but that will be changed to show Windows Server 2012 after support for VM-GenerationID on Windows Azure is added. One point to keep in mind about the tutorial is when it comes to provisioning domain members after the AD installation is complete. Presently, you need to provision the domain members using Windows Azure PowerShell cmdlets. This is necessary to ensure to the IP addresses of the domain members persist after service healing. There is a sample script for that in the tutorial. The domain join experience will have a UI method added in an upcoming update to Windows Azure Virtual Network.
Justin [Active Directory Documentation Team]