Mercurial – Integrate with Active Directory

Yes, you can do what you suggest. Modern versions of Mercurial don't really care where the working copies are stored — they can be stored on a local disk or a network filesystem.

We've had some problems in the past (before version 1.7.1) where Mercurial would fail to break hardlinks in repositories stored on network filesystems. The problem is that two repositories will be hardlinked on the server if you do hg clone foo bar. If a user push a commit to bar, and accesses the repository over the network share, then it's critical that Mercurial discoveres that the files inside bar/.hg/store are hardlinked to foo/.hg/store so that it can break the links. Due to various kernel bugs in Windows and Linux, this could fail with old versions of Mercurial.

So, to recap: your server does not need Mercurial installed if you just install Mercurial on all the clients. Create (I hope I remember the UNC paths correctly)

\\server\share\main

as the main repository and make clones for the developers:

\\server\share\alice
\\server\share\bob

Alice and Bob will work there and modify the working copies independently. They make commits as normal and when they're ready, they push back to the main repo. The usernames are stored in the changesets, so they will be retained when the changesets go into the main repo.

The other answers cover the fact that you can just add more DCs to add redundancy. One other thing that is relevant here is netlogon should not be stopping in a healthy environment. It would be a good idea to dig through the event logs and find out what is causing this to happen. I know of one known issue where netlogon will pause when disk space is low (less than 512MB seems to come to mind).