It is possible to do using SQL authentication, assuming a single SQL
server and a single WSS server. Anything more complex than that
requires using domain  accounts and a domain trust. In your case it
should only require a 1-way trust  (dev domain trusts production) and
this sort of configuration  works and is supported.

Sorry, that is not correct. We have a full farm  using a sql  Server
with SQL authentication. The SQL server  is in a separate, completely
untrusted, AD forest.

The key to getting this to work  is that you can't use the
configuration wizard on the SharePoint servers to create or join the
farm. You have to use psconfig on the command line for the initial
step to establish the link to the config database  using SQL
authentication. Once you've done that, you can run the wizard, which
recognises that the server is already linked to the farm and can do
the rest.

Create farm (first server):
PSConfig -cmd -configdb -create -server (sqlservername) -database
(configdbname) -user (farmaccount) -password (password) -dbuser
(sqlauthaccount) -dbpassword (password) -admincontentdatabase
(admindbname)

Join farm (later servers):
PSConfig -cmd –configdb -connect -server (sqlservername) -database
(configdbname) -user (farmaccount) -password (password) -dbuser
(sqlauthaccount) -dbpassword (password)

The dbuser account  must have been created in SQL Server with
dbcreator and securityadmin roles.

However, while it works, it's not a configuration  I would recommend
without some strong reason why you need it that way.

I knew that in the configuration  wizard that there was no place on
the screen to enter a SQL authentication  option. I just assumed that
it would not be possible to do.

I am not fond of setting  up WSS across domains  especially if one half
is in a dev environment. I am new at this and would be much happier
if everything was playing in one area. When things go wrong it limits
the places to look for the prolem.