Not sure about the setting up an SMS Server in a workgroup (never tried it), but you can make the SMS server a DC. I've done this in some of my lab segements that I could not get domain admin rights to. So I created a stand along DC with a new domain name and then installed SMS 2003 onto the same server.
SMS will be able to manage clients that are not part of the domain that the SMS server belongs to. In other words, as long as you have local administrator rights (known user name and password), SMS can manage it. There is no domain membership requirement. SMS can manage clients in workgroups and non-trusted domains.
In fact, if you create a domain just for SMS, you can still use ADVANCED SECURITY. Advanced security requires AD but it gets rid of most of the accounts that SMS 2.0 uses. Furthermore, your workgroup clients can still use the Advanced Client (with SP1).
One limitation of managing clients that do not belong to the same domain as the SMS site server belongs to, is that you are required use SMS 2003 SP1.
Joseph L. Poandl
MCSE 2003
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