I’m curious as to why your running ADPrep on a member server? ADprep is a utility which prepares or sets the ground work for new W2K3 AD domains or forests. This utility is run from a DC and is run only once from either the infrastructure master (domain) or schema master (forest). All other servers, member servers or additional DC’s can simply be added through systems properties => computer name tab and click network ID to start the wizard. In your case your server thinks it needs to be a DC which is why your getting the error.
Try removing it completely from the domain, wait 15 minutes for replication or force replication (as a precaution, shouldn’t really have to) and re-add it as a member server without running ADprep.