A disclaimer fist: I am in no way advocating the installation of SharePoint 2010 on a DC in a production environment. This information should only be used to set up SharePoint in a lab environment. Microsoft do not support the installation of SQL Server on a DC, which is why the Standalone option is not available in the SharePoint setup.
Firstly, you need to download SQL Express from here. Install it on your Windows Server 2008 box (I was running R2). Use the default setup options, provide a user account for the service to run under.
Next, install the SharePoint Server. You can choose the installation location, but you will be guided through the complete setup without any choice. Choose any options that you require.
At the end, you will run the SharePoint Technologies Configuration Wizard. In the wizard you will be asked for the location of your SQL Server which is SERVERNAME\SQLEXPRESS. Enter this alongside the user name and password to access the server with. In this very initial test, I have used the administrator password for everything, no permissions issues with anything at the minute.
At the end you will have a working installation of SharePoint 2010 on a DC – great for testing.
