@Borut Puhar Thanks for reaching out to Microsoft Q&A.
That's correct. If you're using the same original file server as one of the targets, you don't need to modify DNS records. You'll just need to add the target with the #Servername prefix, and the rest of the setup should be the same. If you decide to use Azure file storage, you'll need to create a storage account and a file share, and then configure the DFS-N root consolidation to use the file share as a target. Keep in mind that you'll need to have the DFS Namespaces server role installed on the server that will host the namespace, and you'll need to have an Active Directory domain set up.
Hope this helps. Please let us know if you have any more questions and we will be glad to assist you further. Thank you!
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