MSDE is pretty much a sql server without the visual tools. There is a free download for it on msft site.
You can freely redistribute it. Build an app setup and install it together with your app.
I believe there is a limitation of 2 GB per database. I dont remember how many concurrent users allow, but since your app is a client app, its not relevant in this case.
You can do with MSDE everything you can do with SQLServer. Its pretty much a matter of connection string.


>Do I pull the data from SQL and then connect to MSDE and push it onto MSDE >or is there a way for C# to have MSDE download directly from SQL?

I would go with the first option. I think there is a way to implement a sqlserver solution(subscription/push based I think) but I dont know how reliable is (performance etc).

Vlad