Since our product is designed to handle hundreds, if not thousands of connections, our engine is based upon Sql Server 2000.
I had to throw together a working version of our web services product onto a standard Windows 2000 Professional box today. Since I knew that the customer was only going to use one client with it, and time was pressing, I installed MSDE , and I am happy to say it works perfectly with our C# web services and ASP.Net pages.
For basic demos and evaluations, this is great, but I hope the sales team doesn't find out and sell our product to some customers without a Sql Server licence!
By the way, the new Web based administrator works fine with it too.