If you create users on Active Directory (or Directory Server) that meet the required password policies for that system, the users may be created and synchronized properly between the two systems. If you have password policies enabled on both systems, the passwords must meet the policies of both systems or the synchronized user creations will fail.
If you enable the password policy features on Active Directory, you should enable a similarly configured or matched password policy on Directory Server.
If you cannot create a consistent password policy on both Active Directory and Directory Server, you should enable password policies on the side that you consider the authoritative source for passwords and user creations. However, there are some cases in which user creations will not work as expected because of certain password policy configurations.