if you're going to use it for internet sites, then you need to buy a per-processor licence. If it's an intranet/extranet, and you're able to prove the number of users who access the server (i.e. via their domain logons), then you can buy client access licences (CAL's). Typically as a rule of thumb, if you're going to have more than 50 users, it's cheaper to buy a per processor licence. Shop about a bit, as you often get a cheaper price than the headline price.

Alternatively, SQL express will do the job with some limitations i.e. maximum database size of 4GB per database, it will only use 1GB of ram, and will only work with 1 processor. I haven't tested it yet, but one of the old database servers in my company has less capability than that list and is supporting 20+  small to medium sites(sites with a few dozen to a couple of hundred of visitors a day) without a problem. If may be worth you time to set up some webstress test to see if a free sql express solution is applicable in your case.

Cathal

Yes, you can have 4GB per database, and thats data as well, logs aren't counted. Also the 1GB memory limit is only for queries, in fact SQL Express can utilise extra ram for general administration tasks such as tracking locks and logging. To get maximum utilisation you'd probably be best advised to have 1.5-2GB of ram.

Theres plenty of tools available that can simulate users visting one of your sites e.g. Microsoft Web application stress tool http://www.microsoft.com/technet/archive/itsolutions/intranet/downloads/webstres.mspx?mfr=true . If you have vs.net 2003/2005 then you may have the Microsoft application centre test product, which is very easy to use. If you go a search there are also a number of tools that can be pointed at existing IIS logs to generate traffic, rather than simulating it.

By the way, Microsoft recommend not running IIS and SQL on the same machine, as both products are configured to agressively grab Ram so that they can serve content as quickly as possible. When both are on the same machine they compete for the same resources so it's not optimal. (note: it's perfectly fine to do it, many people do, it's just you would get better performance if they were on different machines)

Cathal