We have two systems with version ECC 5.0

The SID is XY1 - Development ? Quality
                 XY6 - Production

Now we need to configure TMS between these two systems by assigning XY1 as domain controller. I beleive we also need to establish an RFC Connection for this. Also explain how to update the local files of this systems?

How can I make thro it?

First decide which system you would like to define DOMIAN controller. Configure the Domain Controller Steps to configure
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1. Login to the system with sap* in client 000
2. Goto SE06.
3. Click Post installation activities
4. Goto STMS
5. It will ask for Domain controller name.
6. Enter DOMAIN_?SID> as domain controller name and enter the description. 
7. Click Save button

Steps to add the other system with Domain controller
----------------------------------------------------
1. Login to system with sap* in client 000
2. Goto SE06
3. Click Post installation activities
4. Goto STMS
5. It will ask for Domain controller name.
6. Enter System ID of the Domain controller
7. Enter DOMAIN_?SID> as domain controller name and enter the description. 
8. Click Save button 
9. Login to Domain controller system 
10. Approve the added system.

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