This morning got a new DFS built going and after getting all the config work on it, tried to get the Folder replication to start but got this rude error.
Domain: The Active Directory schema on domain controller dc1 cannot be read. This error might me caused by schema that has not been extended, or was extended improperly. A class schema object cannot be found.

So went into event viewer to check the error in DFS replication and found this:

It was followed by this:
Domain: The Active Directory schema on domain controller dc1 cannot be read. This error might me caused by schema that has not been extended, or was extended improperly. A class schema object cannot be found.

So went into event viewer to check the error in DFS replication and found this:

It was followed by this:
Event ID: 6012
Description:The DFS Replication service detected an incompatible Active Directory schema version while trying to read configuration objects from server DC1. The service disconnected from this server and will try again in the next polling cycle.
Additional Information:
Expected Version: 31
Incompatible Server Version: 30

Looked up Event ID 6012 and found this article by Microsoft. Going through the article cleared everything.
Our Domain Controllers were running Windows 2003 while our file servers had moved up to Windows 2003 R2. So the solution was simple, backup your domain controller, get the CD 2 of the Windows 2003 R2 and run adprep.exe /forestprep from it. We did that and voila DFS replication working happily.
Event Type: Information
Event Source: DFSREvent
Event ID: 1206
Description:The DFS Replication service successfully contacted domain controller \\DC1 to access configuration information.
For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.
For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.