Is it possible to install WSS v3 and MOSS 2007 on same machine and run them both?
The answer to your question is a slightly tricky "yes." MOSS 2007 is actually built upon WSSv3 -- it can't run without it. WSSv3 is laid down on a machine when MOSS is installed if WSSv3 hasn't already been setup.
Once MOSS is installed, targeting one platform over another becomes a matter of carefully selecting features that are used; there really aren't any "hard boundaries" that segregate WSSv3 and MOSS beyond feature usage. For example, basic team sites, wikis, etc., are "straight" WSSv3 sites (site definitions) and don't make use of any MOSS features. Leveraging publishing sites, collaboration portals, etc. ... or activating features such as the publishing infrastructure or KPIs on core WSSv3 sites, on the other hand, would then make the site a "MOSS site."
I hope that answers your question!