To develop  in SharePoint 2007 all you need is Visual Studio 2005 and
SharePoint. There are several other pieces you might want to have also.

1) I recommend building webparts from scratch, but you could also
use the Visual Studio Extensions for Windows Sharepoint Services.
(Note: this will only install on Windows Server 2003)

2) If you want to create Workflows in VS you will need the Visual
Studio Workflow Extensions for SharePoint. You may also want to get the
SharePoint SDK and ECM starter kit to take a look at examples.

3) SharePoint Designer is NOT required and usually isn't used by
developers. Don't ever use it to edit pages stored on the 12 hive of
the file system. You will break the page.

I'm not sure what VS2007 is. If you mean Visual Studio (Orcas), no you
don't need it. If you mean Virtual Server, then yes you should look
into either VS or Virtual PC. But neither of those has anything to do
with Workflows.

If you have SharePoint running on your development  environment (VPC?)
then you only need VS.NET to develop  WSS applications. There are four
ways that SharePoint Designer (SPD) adds value to your development
environment:

1. Workflow prototyping
2. Data Form Web Part development
3. Setting properties that cannot be set in the browser (like hiding a
list from the All Content page or setting Zone properties)
4. Establishing Contributor Settings

I personally do not recommend that you use SPD for ANY work that will be
replicated across more than a few sites. SPD is targeted to the no code
power user and therefore each change is a one off copy rather than a
template. Get very many one off copies of anything and it become a chore
to support.

Just saw this posted, might be helpful...

markharrison.co.uk/.../development-tools-and-techniques-
for.htm

I believe I got what I wanted however

Sharepoint is set up on a server, not my local box. I do all
developement on my box then transer it to the server.

Am I missing something....??

You've got it. Of course, for some work you'll need to have the
appropriate SharePoint DLLs on your local box.

Also, I highly recommend 'transferring' it to the server using
Features/Solutions instead of just manually changing everything. And
don't forget source control!

This kind of a setup will work, but debugging code for webparts, event
handlers, etc will be difficult. The actual code will only run on the
SharePoint server so you will need to do remote debugging with your
setup. That tends to be slow and not a lot of fun. That's why I
normally recommend developing on a virtual PC session on your local
computer and deploying to the server.

Far and away the best method of developing for SharePoint is to set up a
virtual machine on your dev box and set up a full blown SharePoint
environment (W2K3, WSS or MOSS, SQL Server, Visual Studio). This allows
for easier deployment and debugging and will save you much time and
effort in the end. It's certainly possible to develop  on a
non-SharePoint machine and then deploy to the server, but in my opinion
(and pretty much everyone I know who does SharePoint development) it's
just sooooo much easier to use a VPC. Just my two cents...

If you have very many people in your environment, you will end up
stomping on each other regularly in a shared development  environment. I
highly recommend that developers use a local sharepoint  environment. Eli
and Bil do a good job describing how to set this up:

weblogs.asp.net/.../build-a-sharepoint-
development-machine.aspx

weblogs.asp.net/.../437788.aspx

You mean a virtual PC Session with MOSS installed right?

Correct. A Virtual PC Session with Server 2003, SQL, SharePoint, and
Visual Studio 2005.

How does licensing MOSS work with so many installations?

Most people I know who do it this way have an MSDN license. MSDN allows
multiple licenses of MOSS for development, just not for production.

MSDN includes everything needed for a SharePoint developer.

I am not sure why, but when i click these links, they go to a page not found?

Remove the spaces and they should work.

Try these tinyurl links instead.

http://tinyurl.com/334j67 <http://tinyurl.com/334j67>

http://tinyurl.com/h2dba <http://tinyurl.com/h2dba>

Microsoft Office sharepoint  Server (MOSS) provides various features and capabilities that help you to extend the functionality of existing SharePoint solution. The features are and capabilities include:
o Personalization 
o User profiling 
o Navigation 
o Indexed search 
o In-browser rendering 
o Web parts 
o Document management 
o Content management 
o Records management 
o Site structure

http://www.sharepointengine.com