On a Windows Server 2003 DHCP server, when an DHCP lease expires, the lease is marked for deletion in the DHCP database. It isn't immediately deleted from the database however. Instead, DHCP clients are granted a 4 hour reprieve just in case they still need to use the address so they can renew it. After this grace period elapses, the expired lease can be reused by another client requesting an IP address. Once per hour the DHCP server runs a cleanup cycle which reclaims unused leases. If you have lots of DHCP clients issuing requests on your network and there are no leases available, the DHCP cleanup cycle runs immediately, reclaiming leases marked for deletion so new leases can be issued to clients requesting them. You can modify the cleanup cycle to run more frequently (if you are short of available leases) or less frequently (if you have a large pool of available leases) by modifying the registry key HKLM\System\CurrentControlSet\Services\DHCPServer\Parameters\LeaseExtension.
Mitch Tulloch is President of MTIT Enterprises, an IT content development company based in Winnipeg, Canada. Prior to starting his own company in 1998, Mitch worked as a Microsoft Certified Trainer (MCT) for Productivity Point International. Mitch is a widely recognized expert on Windows administration, networking and security and has written 14 books and over a hundred articles on various topics. He has been repeatedly awarded Most Valuable Professional (MVP) status by Microsoft for his outstanding contributions in supporting users who deploy Microsoft platforms, products and solutions. Mitch is also a professor at Jones International University (JIU) where he teaches graduate-level courses in Information Security Management (ISM) for their Masters of Business Administration (MBA) program. For more information see http://www.mtit.com.