Does anyone have thoughts or suggestions on installing exchange server 2003 on a backup domain controller?

a backup domain controller would mean NT4 so it won't install :-) The general rule is don't install exchange on a DC/GC unless you absolutely have too. It is not a best practice, but it is supported.

I have on windows server 2003 with active directory set as the domain controller and i wanted to set the second server as a backup domain controller, but also use it for exchange server 2003. It is currently configured this way and is working fine, however i do not have any clients hitting the exchange server yet. Should i reconfigure this server and set the backup dc somewhere else?

First, get rid of the 'backup domain controller" idea...all domain controllers in 2003/AD are multi-master, some hold single master roles, but 'backup domain controller' is nt4 terminology. Here's a good article for you: http://www.petri.co.il/problems_with_exchange_2003_installed_on_domain_controllers.htm

Ok, maybe the whole bdc has me confused. I'm new to active directory and exchange. Is it true that exchange requires ad, so i had to run dcpromo on the exchange server in order to install it? Is there anything wrong with this?

You do need A.D., but not necessarily on the same box as exchange. I would reccomend having 2 domain controllers and exchange on a seperate server, but if you must install Exchange on a DC, be aware of the issues as highlighted in the previous post. I would also recommend becoming very familiar with AD before deploying exchange is you'll need to know it in order to troubleshoot any possible exchange issues.