SBS...yikes....there's usually a LOT more than just shared data there. Exchange (email) being a biggie. Sharepoint users?
Stop 7B is a drive controller error...could try a few different modes there for the drives
Anyways, the direct way....do whatever means is necessary to crack open the drives and browse them (shouldn't be hard if you have them in VHD format). Copy the Profiles directory..along with everything else, shared data, etc. It would be best to get a big disk...format it FAT32...and copy all the data to it. This will "drop" all of the NTFS security quirks. (ownership, permissions, etc).
From the workstations, hopefully the local Administrator account is known? I can't stand walking into a network in this scenario where the prior tech never secured the local Administrator account. I feel like clubbing them over the head with a telephone pole a half dozen times. Hopefully the domain user accounts are members of the local admin group and you can enable the local Administrator account if it's not, or go and change the password of it if it's not enabled and you don't know what it is.
I'd pull the workstations to workgroup mode (unjoining the domain).
Copy each users profile that you pulled from the server to some local slush folder, like C:\Download.
Once you have your new server built, running as a DC, join it with the workstation as domain admin, reboot, log in as domain user, reboot...set user to local admin group, reboot...log in...set their account as local admin if you want, log out, log in as admin, and copy the users old profile folders to their respective new homes. (or you don't have to log in as admin for that, you can copy 'em over from the server via \\workstation\c$ just copying and pasting from the \\workstation\c$\download\blah blah folders to \\workstation\c$\users\username\blah blah
Flush out the old GPOs...often there a few that always linger...