There has been some debate between MSDE and WMSDE and lets hope this post will clarify these two products and state some differences.
When you install Microsoft Windows SharePoint Services on a single server using the defaults, you have an installation that uses Microsoft SQL Server 2000 Desktop Engine (Windows) (WMSDE) for your databases.
SharePoint Portal Server 2003 includes a version of Microsoft SQL Server 2000 Desktop Engine (MSDE 2000) with Service Pack 3.
1. Is in the context of SharePoint Portal Server
2. Has a managed concurrency workload governor that limits up to five concurrent batch workloads for optimal performance. If there are more than five concurrent workloads, it is highly recommended that you migrate to SQL Server 2000
3. MSDE 2000 supports (read as maximum size) up to 2 gigabytes (GB) per database. This limitation is per database, not per server. A single computer can support 16 MSDE 2000 instances, each with databases of up to 2 GB in capacity.
1. Is in the context of Windows SharePoint Services
2. If you are running Microsoft SQL Server 2000 Desktop Engine (Windows) (WMSDE) for your database, no search features are available. If you want to allow full-text searching on your Web sites, you must upgrade to SQL Server 2000.
3. WMSDE does not impose the 5 concurrent users and 2 GB per database limitation.
MSDE and WMSDE is fine in a small-scale environment, when you are hosting just a few Web sites, but if your server suddenly gets popular and you need to start hosting hundreds of sites, you may run into performance and storage problems. If you find yourself in this situation and need to move to a more scaled out solution, you can switch to using Microsoft SQL Server 2000 Service Pack 3 (SP3) as your database back end
Q. How do I distinguish between an MSDE and WSMDE installation?
A. Easy, see this BUG # : 469531.