Hello @Homer Sibayan ,
Thank you for posting here.
Generally raising function level will not impact member servers, because forest functional level and domain functional level are only for domain controller and not for member servers.
Functional levels determine the available Active Directory Domain Services (AD DS) domain or forest capabilities. They also determine which Windows Server operating systems you can run on domain controllers in the domain or forest. However, functional levels do not affect which operating systems you can run on workstations and member servers that are joined to the domain or forest.
We can see information below from the link below.
There are two important restrictions of the Domain or Forest Functional Level to understand, and once they are, these restrictions are obvious. Once the Functional Level has been upgraded, new DCs on running on downlevel versions of Windows Server cannot be added to the domain or forest. The problems that might arise when installing downlevel DCs become pronounced with new features that change the way objects are replicated (i.e. Linked Value Replication). To prevent these issues from arising, a new DC must be at the same level, or greater, than the functional level of the domain or forest.
The second restriction, for which there is a limited exception on Windows Server 2008 R2, is that once upgraded, the Domain or Forest Functional Level cannot later be downgraded. The only purpose that having such ability would serve would be so that downlevel DCs could be added to the domain. As has already been shown, this is generally a bad idea.
What is the Impact of Upgrading the Domain or Forest Functional Level?
https://techcommunity.microsoft.com/t5/ask-the-directory-services-team/what-is-the-impact-of-upgrading-the-domain-or-forest-functional/ba-p/399348
And we can see Active Directory features related to Windows Server 2012 R2 domain functional level and forest functional level
Active Directory features related to Windows Server 2016 domain functional level and forest functional level
Forest and Domain Functional Levels
https://learn.microsoft.com/en-us/windows-server/identity/ad-ds/active-directory-functional-levels
Other references.
Understanding Active Directory Domain Services (AD DS) Functional Levels
https://learn.microsoft.com/en-us/previous-versions/windows/it-pro/windows-server-2008-R2-and-2008/cc754918(v=ws.10)?redirectedfrom=MSDN
Raise the Domain Functional Level
https://learn.microsoft.com/en-us/previous-versions/windows/it-pro/windows-server-2008-R2-and-2008/cc753104(v=ws.11)
Raise the Forest Functional Level
https://learn.microsoft.com/en-us/previous-versions/windows/it-pro/windows-server-2008-R2-and-2008/cc730985(v=ws.11)
So if we raise it to 2016 Functional level, those XP and 2003 member server should be able to authenticate.
Hope the information above is helpful.
Should you have any question or concern, please feel free to let us know.
Best Regards,
Daisy Zhou