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Can someone please shed some light on whether AWS have the capabilities to offer a Virtual Machine set up, that is, having the basic Windows 2008 there while I take care of the rest, i.e. installing SQL server 2008, MS Report Viewer, and the rest of DLLs required by my small site to run? Is there a specific package name for this?

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Simply put: yes, it can. It's not as straightforward as that, though: you'll need to configure the environment before you can really use it, but it's not that complex. The simplest, really, is to get an Amazon WS account and try it for yourself: it'll cost a couple of dollars at most.

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That is precisely what AWS is capable of doing - see their services page at http://aws.amazon.com/ec2/#os

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