>>>Im considering re-formatting the server and only putting the sql server on it and finding another box for the iis server.
>>
>>Great idea... everything I've read says give SQL Server it's own box. I've seen the same thing happen with clients that try to run Exchange and SQL on the same box. They eventually have problems because each is a hog and tries to take all the resources away from the other.
>
>Then how does MS get away with selling their SBS product? Exchange, SQL Server, Proxy Server, modem sharing, etc... all on one box. Licensed for up to 50 users...

Microsoft can 'get away' with anything they want... when you go to implement it and have a multi gigabyte database with all 50 users hitting it at the same time and power email users who surf the internet continuously and download mpeg videos while people dial in to access the network, you will eventually have problems with this configuration. I have worked with Microsoft on a problem with a box where SQL and Exchange were running together - the only solution was to separate them.

I'm not talking about an environment where you have a 100mb database and 10 users - sure that will probably be Ok. But you should not design your network like this if you have any intentions of growing. The first accounting person that runs a query against the server for some weired data requested by auditors will cause the server performance to degrade.

The scenario given for this post indicated that IIS and SQL Server were having problems because of one or the other being overloaded. I don't know exactly what the problem was, but it was obvious that something was causing them to fight over resources. The best solution is to separate them. I know you can work on the systems to improve performance, but eventually you will end up back at this problem when the use of the system increases.

Since you don't have any control over the OS and the server systems, putting them on separate boxes allows you take any of the unknowns out of the mix.