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Help with a CRM Development enviroment

I have been working with AD, Exchange and many other Microsoft technology's for years however i'm new to CRM.

The guy that was doing the CRM administration for my company left some time ago and I had to take over.

Now the management want's me to create a CRM Development environment that's identical to the production environment and both the Development and the production to work side by side.

The CRM environment is virtual and is a CRM 4.0 environment so my question is the following...

Can the CRM development and CRM production environment work side by side within the same AD domain

What would be the best way to achieve this? can this be done using clones or is there a better way of doing it?

I would appreciate any help or advice you can offer on what's the best way to achieve my goal.


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