The SP Object Model is only available on the SharePoint 2003 (WSS or
SPS) server itself. If you are developing a Windows client side
application you need to use the web services to interact with
SharePoint.

what about SP Object Model in c# web
applications(aps.net). Is it possible?

As long as they are running on the same server, yes.

A blurb about this technology I felt should prove
helpful...

http://www.portalbuilder.org/default.aspx

Do you have WSS installed on the machine running the code?

I develop my code in xp pro machine and windows  server 2003 dir. inetpub and
60 are mapped to my computer and i have administrator rights in SPS2003. I'm
sorry i didn't get your question.

You will need to be able to run  code that access the SP Object Model
from a computer running XP, you need to either install Visual Studio
2003 on the server running Sharepoint or install Windows Server 2003 on
your workstation

But I can easily add references to
Microsoft.SharePoint.dll....Microsoft.SharePoint.Library.dll or any other
SharePoint .dll file...and work from XP Pro operating system.

You can add the references and build under XP, yes, but the code will not run.

i was not able to install VS .NET and SPS2003 together on Windows Server 2003
operating system. If I remember, I was having the problem of front page
extensions. VS. NET require front page extension where as SPS2003 doesnt
require. I had to something with the virtual server.

Please let me know if I'm saying correctly and please let me how to install both
in Windows Server 2003.

You can install VS.Net without FPSE, you'll just get a warning. You can also
temporarily enable them long enough to get VS.Net installed - they are not
required for it to run  if you are just doing SPS development.

Just want to make sure..Tomorrow i'll try to install VS.NET with FPSE in WS2003
operating system. Then I'll remove or disable FPSE. and then I'm good to go...
I'm I correct.

YES sounds good then install your Sharepoint system.
Yes you most definitely have to remove the FPSE after
the installation of VS...go ahead and install the C#
if you have it good to have both in case you need it.

Also the permissions etc take a look at

w3.portalbuilder.org/.../Introduction.htm

I already have SPS2003 installed in WS2003 os...I will install VS .net with FPSE
first and then unistall FPSE...and i didn't get by "go ahead and install the
C#"...i'll install complete VS .net