There is a great blog post about using SPS2003 and SQL 2005 at http://forum.olympiacos.org/blogs/venceremos/archive/2005/10/22/dimitrisv.aspx but there are a few typos in it that may be confusing. In a nutshell, install WSS with SP2 first (using Kerberos authentication) and create a site. Then install SPS 2003 with SP2 over the WSS install and it works great!
While the KB article does not specifically state that there are any issues with running SPS/WSS under Virtual Server (I do it all the time without any problems), MS has not specifically tested this scenario so will not support it in a production environment.
Nothing really language specific but more directed towards the new technologies that make up Visual Studio 2005 and .Net 2.0.