Which version are you using?
If you're using 2007, then you have no choice but to install WSS/SharePoint
on the same server. You may need more than one server depending on the
number of users, projects, documents and availability/performance
requirements.
If you using 2003, then you can select to install WSS/SPS on the same server
or a different server. Technically these will co-exist, but again you need
to be mindful of performance/availability requirements.
Paul
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