We worked with Clarity and Microsoft team to find a solution. We didn't have Clarity version that supports 2008 AD and Infrastructure team didn't want to stop upgrading to Windows 2008 AD.
After a long battle and with so many calls/emails with Microsoft, we got a fix from them. This needs a registry change in Active Directory Server. It was tested and finally deployed on all Active Directory Servers. Now Clarity (12.0.x) runs fine with Windows 2008 AD.
[ Make following Registry changes in Windows 2008 R2 Domain controller servers]
HKLM\System\CurrentControlSet\Services\NTDS\Parameters
Add String value “DSA Heuristics”
Set the value to 000000000001
More detailed discussion can be found here , and also some explanation I logged as SangeetC (on 06-Aug-2010)
* Test it in your environment before moving changes in Production.