Evault 9.0.2 to 10.0.3

I have read through all the documentation for upgrading.  Please see my concerns below.

Server 2008 R2 64bit with SQL Server 2005 on the same server.  Should the SQL Dbase be on a separate system? 

I should be able to do an in place upgrade by running the deployment scanner and applying the 10.0.3. cumulative hotfix?

Thanks!