Install but do not go in UI configuration. I may be wrong but I don’t think AD account  Creation is an option  for SP Portal (as it is targeted for Intranet with user accounts  already in AD). I used AD A/C creation  mode for WSS installation and it does work as expected. After the setup/installation, do not follow the UI for configuration, instead, use stsadm -adcreation with other options right for your scenario.

You do need to have AD available. AD is just a standard AD, WSS is an application that benefits from it.