The major difference in search  between WSS 2.0 and WSS 3.0 is that WSS
3.0 will search everything within the site and all subsites and uses the
same indexing engine as MOSS, where WSS 2.0 was limited to a single site
and uses SQL Full Text indexing. MOSS for Search (not free) or the new
Microsoft Search Server 2008 (currently in beta - there is a free
Express version) will allow you to index and search all of your WSS
sites. MOSS for Search and MOSS are not the same thing - MOSS for
Search is really WSS 3.0 + only the search functionality in MOSS. You
don't get any of the other MOSS features and it's priced considerably
lower than full MOSS.

For the single site with subsites scenario you describe, WSS 3.0 should
work fine. You'd only need MOSS for Search if you also want to index
other sources (like other web sites) or WSS sites outside the same site
tree.

Also, if I implement WSS 3.0 and later on want to implement MOSS 2007
for Search, is it easy to simply add that into the farm?

It looks like Search Server (which I believe is what MOSS for Search is
now called) will install on top of WSS, so you should be fine. You
won't lose anything.

Thanks, so if I had two virtual servers setup so that I had
site1.domain.com and another called site2.domain.com and the following
sub sites

Site1.domain.com/systems
Site1.domain.com/hr
Site2.domain.com/finance

And I ran a search  from site1.domain.com I would not get any results
from site2.domain.com, right?

Correct..............................

How will WSS Search work with two WFE using NLB?

Also, does the WSS Search Service have a place to specifiy what account
it should run as? This account should be a member of the local admin
group on all WFE and a member of the WSS Admin WPG group on all WFE's
right?

Am I correct in thinking that I have to create the same virtual servers
on both WFE and extend both, but one I create a new content database and
the other I use an existing? And then once that is done join them to
the NLB Cluster?

The limiter is not the number of WFEs, it's the number of site
collections. In an NLB setup, both WFEs are serving the same content
from the same sites, and the indexing is done based on the site/site
collection hierarchy.

No, WSS doesn't have these settings, because they are not required for
indexing local content. MOSS has them mainly because it can access
content sources outside the current environment.

As for installation of multiple WFEs - this is a "farm" configuration in
WSS - see
technet2.microsoft.com/.../36114198-56db
-40f5-820b-d49c5ee7de1a1033.mspx for the detailed install instructions
for WSS. The bottom line is you setup the NLB, then install and
configure the first WFE (creating a farm in the process), then install
and configure the 2nd WFE choosing to connect to the existing farm.
Once this is complete, anything done on either WFE will automatically
propagate to the other, and the NLB address is used to provision the new
site collection(s).

In WSS search  covers a single site collection. Only SharePoint content
in the site collection can be crawled. You cannot crawl databases, mail
servers, application servers, or Web sites and file shares outside of
the site collection. In a deployment with more than one site
collection, each site collection provides search only for content on
that site collection, and there is no aggregation of search results
across site collections. There in each WFE you can access only
information from the site collection that the user is logged into.

You can have it crawl Site1 and Site2 and it will combine the results.
I have search  server set up on one server and it's crawling three other
web applications.

Look at the recently announce search  Server 2008 Express. It is free and
essentially allows full featured search (as you get with MOSS and MOSS for
Search) inside WSS 3.0.