You have to raise your Active Directory domain functional levels to Windows Server 2003 or above before you can set up directory ...

You have to raise your Active Directory domain functional levels to Windows Server 2003 or above before you can set up directory sync. You can safely ignore this message if you don't plan on using directory synchronization or don't know what it is.  Click on the link 'get help fixing this issue' in the actions pane located on the right side of the screen for assistance.