Let me see if I can clear some things up.

>I bought Dr. Strahl's Internet Applications book (great!) and have also read through some of the MTS white paper he wrote as well as several MS VFP MTS IIS texts. I think the reason I'm getting confused is because some things seem to contradict each other.
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>1. What I thought I could do is use SQL-Server as a data store and have web browser users or VFP client users (using CreateObject in each case) get their data through an out-of-process VFP .exe server. This middle-tier application would be able to authenticate users (based on local group membership in a local NT SAM) and fetch remote views of data and pass them to the calling application. But I thought this might lead to problems because I am not using MTS to actually broker anything (just-in-time activation, ODBC connection pooling) in this case.

MTS will also provide you with the authentication. The role authentication in MTS uses NT ACLs to validate a user. If the user is not in the role assigned to the component, the component won't even run, thereby prohibiting access. This is automatic. You don't need to do any security checking.

For the web browser, you'll hit an ASP page and use Server.CreateObject rather than CreateObject.

>I also don't know what "universal data format" I would use to pass data back to the caller. I also thought that the mid-tier software would be essentially running in the client's memory space (CreateObject()) and not be truly detached.

ADO or XML.

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>2. Then I thought I would just do an in-proc VFP .dll instead because then I could make it run inside MTS, but I am still instantiating an object inside of the client-tier's memory space. I think I also have to put some client-side logic there to talk to MTS in order to support the rollback/commit logic that the mid-tier is supposed to be doing.

No, the object will be running on the server.

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>Can just using (Strahl's updated) FOXISAPI.DLL be the 'holy grail' of VFP-mid-tier services, or do I just live with option 1?

Personally, I'd go with MTS. It sounds like you think using MTS is inferior and you're giving something up, which you're not. I think you're actually gaining by going with MTS.