You can locate replicated folders on a Storage Area Network (SAN) if you allocate the storage exclusively to the relevant node and do not share it with the other nodes. However, the DFS Replication service will not fail over to another node.
DFS Replication in Windows Server 2008 R2 includes the ability to add a failover cluster as a member of a replication group. To do so, see Add a Failover Cluster to a Replication Group (
http://go.microsoft.com/fwlink/?LinkId=155085).