KC9900,
Thank yo for detailed description. I have a few comments.
1. From my experiance fields Domain,Username,Password,Email (5-8) are optional. I left them empty and didn't see any issues.
2. Setting File Permissions for DNNsite\admin\security\WindowsSignin.aspx (Step 3) is also optional, but can be handy to add extra control which groups are allowed to have Windows Authentication.

3. "Cons: To autologin, you have to use this link instead of the regular DNN login link: http://dnnsite/admin/security/windowssignin.aspx"
I am using the mixed authentication approach(see here) based on  Richard Dudley's  post  "How I Made Windows Authentication and forms Authentication Work Together".I've described some changes that I had to do to support it in DNN here.

4.  Password storage. I agree with you that storing copy of AD passwords in DNN table is not a good idea. And I  think that it is possible always use AD to check password. 

5. Also your link to the script to auto-add the domainname\  doesn't work. The link to SnoMan post is http://forums.asp.net/thread/1121026.aspx 

This is an excellent tutorial, and it worked for me with version 4.0.1.

I recently installed the latest version (4.3), which was suppose to fix a bunch of users/membership problems, but I haven't seen anything new - in fact, more problems have arisen.  I've done all the steps above, but it just won't work - it always redirects to the login page, no matter what.  I did everything above, and that's all it does. *sigh*
The AD authentication certainly was a good idea...

What doesn't seem to work:

AD Authentication on multiple portals.  The AD Authentication wants to add a new user instead of recognizing that one exists and adding on to the UserPortals table instead.

AD Passwords.  Security never seems to authenticate a user by passing in the username and password from AD in my environment.  I've had to detect which authentication type is being used and only authenticate username and password for forms security.

I've worked around both of these by editing the source code, but would like to see them fixed in DNN.

One other item which I haven't been able to compare to the working of a forms authentication environment is to redirect the user to where they were attempting to go before being sent through the login process.  This was one of the items which was slated to be fixed (under forms authentication) but doesn't seem to work with AD authentication.