Microsoft Knowledge Base Article 314861 contains the following summary:

This article describes the mechanism that Windows XP Professional uses to locate a domain controller in a Windows-based domain.

The article details the process of locating a domain by its DNS-style name and by its flat-style (NetBIOS) name, which is used for backward compatibility. In all other cases, it is recommended that you use DNS-style names as a matter of policy.

The article also addresses issues that are involved in troubleshooting the domain controller location process.