Windows Server without AD?

Hello, I have come across a Windows Server 2003 system that has not had
AD (or DNS or DHCP) installed on it. It does have Terminal Services
installed (5 licenses) and there are local accounts setup for each user.
Single server for the organization.

What are the security implications of not having AD installed? I'm
assuming one would be that it'd be easy to reset the local Admin
password and gain access to the box.

One note is that all the clients in the network are Macs, using RDP to
access this Terminal Server.

Thanks in advance.

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