You don't have to have IIS running on the same server as SQL Server. It just needs to be able to reach SQL Server.
The requirement is that the SQL Client tools are installed on the IIS box.
-Mike
>There is alot eaiser way to get xml out of a sql server over HTTP. Assumin you have iis running on the sql server, goto the sql server in the start menu, select configure sql xml support in iis. Select your website, right click select new virtual directory and follow the wizard.
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>Eric