Presumably, you mean SQL Express, since you cannot run SQL Server on XP, this is a server product.
If the client can afford your product, he can provide a copy of Server 2003 or something else built into file sharing. Admittedly, SQL Server is quite expensive, but if your product needs it, then how it goes. If cost was a problem, you should not use SQL Server as a database platform. It makes no sense to try to force the server solution into the client OS. Soon you will have all kinds of problems.
Does the client no longer have a domain infrastructure?
As a result, if the client has 5-10 software users, they should be on SBS anyway for a number of other reasons. However, you are not getting SQL Server.
(Samba will be an option for file sharing, but certainly more expensive than just buying Server 2003 in this case).
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