DFS - FRS Staging is N/A

I have windows 2003 STD Edition SP2, having DFS,

1 server on each site, Trying to enable DFS replication and having error on below screenshot,

NA - --- is source folder and I dont have issue on Destination folder ,

One more question, I have enabled couple of folder replication where source and Destination having Data, as soon I enable replication DFS create a folder(NtFrs_PreExisting___See_EventLog) put all existing file to that folder and replication starts from scratch on destination folder.

Please suggest

Thanks