Being from the SDE old school, I have had it drilled into my head for years the you should always install ArcSDE and your RDBMS on the same server. The argument is that there is the increase of network traffic between the two boxes would slow everything down. It sounds to me that this is just a leftover from the days of 10-base and 100-base connections. Nowadays, most servers have fiber connections with gigabit+ connections, so, this network traffic argument doesn't mean too terribly much any longer.
Many orgs now are really trying to separate DB's and application servers, so the ability to efficiently install SDE and your flavor of RDBMS is going to become increasingly important.
So armed with a couple of forum posts I was off. While I have done easily a hundred SDE SQL Server installs, I'm no slouch at Oracle these days either. I cut my teeth with Oracle SDE on a Florida Department of Health 8 cpu Sun Box, many years ago now, which is another story completely...
I'm happy to report the install went very very smooth. I only needed to change a couple of things. I used a mix of command line, sql plus and the post-install wizard. I used sql plus, along with the provided install script (in the sdehome\tools dir) to create the SDE user, Schema and set permissions. I then used the post install to 'authorize' SDE and then create the 'repository'. Next was the command line to create the service. The big thing here is the -n option, which tells the sde service not to depend on the Oracle service to start. Since Oracle wasn't on this server, thats obviously pretty important. Now, the only tough part...When I couldn't get the ArcSDE service to start, I went searching. I was luck to find this ESRI Kb article, that outlined the mod in the SDEHOME\etc\dbinit.sde file that I needed to make (set LOCAL=netservicename). Too bad I didnt find that article before, because its quite good.