MSDMBack is all or nothing. It will only back  up and restore  the
complete server with all workspaces. There are some tools out there
http://www.sharepointserver.com/backup.html that say they can do an
individual workspace or file backup/restore but I know of no free  tool
to do it.

Also, you can only install one SPS server per machine.

Can I have Multiple instances??(Like we have in SQL SERVER 2000)

No, 1 Server multiple  workspaces.

You cannot backup  individual work space, it backs all the sps  server, there
are third party tools available to do it but not free  of cost

And only one instance  can run  on one machine

I've found  the avepoint solution cheap and very functional. Their backup
software is considerable cheaper then the other obvious vendors.

AvePoint solution is the best, They showed the first
Migrator at TechEd 2003, enables to migrate documents with history
and categories from V1 WSSDL to V2 SQL. No one can do it even MS can
not either.

That was I see in TechEd. By the way, I stopped by the booth and
talked to them. They will give you a special pricing if you tell them
you are a small business.

If you want to get a good one without spending much, you can contact
them directly.