The Time service is not configured to use a reliable source for synchronization.
From a newsgroup post:
1. Stop the windows time service: open a command prompt and type "net stop w32time".
2. Configure the machine to sync with an outside time source: type "net time /setsntp:ntp2.usno.navy.mil"; this will set the machine to automatically sync with one of the us navy's time servers
3. To confirm this works type "w32tm -once -test -v" this will test synchronization against the navy time server and display verbose output.
4. Sync with the navy time server: "w32tm -s"; if you get a response that looks something like "RPC to local server returned 0x6b5", then it worked, but if you get "RPC to local server returned 0x0" then it did not, which usually happens if you run the command while the w32time service is running.
5. Start the w32time service: "net start w32time". Once you start the service, the clock should automatically sync with the navy time server. You should not have to worry about any other domain machines, as they should automatically sync their clocks with the pdc emulator.
to find out how to configure an authoritative time Server in Windows 2000, and ME314054
to find out how to configure an authoritative time Server in Win XP.
See the link to "Microsoft Windows 200 Magazine June 2001" and "Windows Time Service" for more details on the Windows Time Service.
Why the system (Microsoft) is asking for an external time source? Because the PDC of the domain at the root of the forest it is by design the root SNTP source used in cascade by all the DCs, servers and workstations for the entire forest. So makes sense to be accurately maintaining its time using an external precise (and trusted) NTP source.