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I have two stand alone machines with no domain controllers. One is a dev box with Visual Studio 2010 and the other has windows 2008 installed. Can I use the dev box to develop Sharepoint apps without connecting to a Sharepoint server or do I need to set up the other box as a Sharepoint server and the dev box is used against it?

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SharePoint 2010 can be installed on a single machine without AD as long as you have the pre-reqs installed. MS provides a nice pre-req auto download and install tool with the installation of SharePoint 2010.

I installed SharePoint Foundation 2010 on a stand alone W2K8 R2 x64 box and it works fine:

You should be able to connect to it with VS 2010.

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