Drupal single sign on local
Yes, you can test it against any Active Directory you can connect to.

But if you want a local copy of active directory, you can install a local copy of Active Directory Lightweight Directory Services (AD LDS) for Windows7 or equivalent.

Once installed, you will also need to configure to work with drupal's ldap module as normal. Then you will be able to work locally.

I have done this using XAMPP on a windows laptop.