Here is the difinitive source of version information
http://mindsharpblogs.com/penny/articles/481.aspx
WIndows SharePoint Services (aka WSS) is Free (or No Charge).
SharePoint Server 2007 (aka MOSS) is chargeable.
I think .net framework 2 is installed with IIS, while .net 3.5 is a
pre-req
for WSS 3 (at one time you could use 3.0 with some WWF patches).
WSS has built in support for workflows using Visual studio. You can
also use SharePoint Desiger to do workflows (although with different
limitations/capabilities)
Without getting in to very sophisticated (and reportedly sometimes
unreliable workarounds)
you need to do VS Workflow development ON THE SERVER with SP
installed.
You could google options for some of the clever workarounds and take
your chances.
a better option if you dont have access to a server it to use virtual
server images
(like VM ware or MS VPC) to create server environments to run from
your laptop.
I have done this with several clients and it works very well. You can
also download
fully configured MOSS or WSS trial environments for your
investigation.