Demote 2003 DC from within Directory Services Restore Mode

You've got a bit of a mess there.

Microsoft recommends against demoting a Windows Server 2003 domain controller running Exchange 2003. (They describe a "...loss of some Exchange functionality..." but don't go into details.)

I'm not aware of any DCPROMO switches that will help you if you can only boot in DS Restore Mode. I think your best bet is probably the procedure in KB332199 under "If the domain controller cannot start in normal mode".

If it were me and I managed to get it running again w/ the manual regsitry modification procedure I'd setup a temporary Exchange Server machine, move the mailboxes off the source server, level and reload the source server, then reload Exchange and move the mailboxes back. I don't think I'd trust a machine that had AD "manually" removed as described in that procedure.