>>Most cloud solutions don't offer dedicated hardware. You can use a VM which allows OS level configuration but, for most purposes even that may be overkill. MS, for instance, offers a 'Web Role' which, essentially, allows you to upload and run one or more web applications on IIS7.
>
>But, in my case, I would need VM as I not only have to run a Web server on that machine but Robot, which are desktop EXEs and so on. So, basically, I need to have a full drive access and I believe only a VM setup can allow me that. Is that correct?
No
Azure Compute has 'Worker Roles' as well as 'Web Roles' which can be used to run tasks outside the web role.
You can also use a 'Virtual Drive' or possibly other options such as Azures own storage options.
SQL Azure, which is very similar to regular SQL server is also available.
More detail here :
http://www.microsoft.com/windowsazure/features/