Workgroup & Domain

I have a physical network that hosts a workgroup. I have added a Domain (Win2k server) and I thought that a workgroup and a domain could not see each others files. However I can see both the Domain and the workgroup folders with any PC, they just have different network icons in Explorer. Is this right? Have I set things up wrong? Or is this something to do with the Domain Controller being a Dual boot with an XP build that is a member of the workgroup?
I also have trouble adding other PCs to the domain - message says that they cannot find the domain. But when I search the pc finds the Domain Controller.
TIA

 

If all the workstations/servers are plugged into the same hub or switch you'll see them all in Network Neighborhood. Most likely the reason you can't join some workstations to the domain is because the domain controller is on a different IP subnet.