As a best practice, you will want to have your SQL database on a different server than your core orion application server (the server that is hosting NPM). You can run NPM on a VM, that's no problem. Take the time to read the Admin guide, it's pretty helpful.
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https://support.solarwinds.com/@api/deki/files/34902/NPM_Installation_Guide.pdf p. 20 indicates 'The Orion server and the SolarWinds Orion database must use separate servers.'
Check out the guides here https://support.solarwinds.com/Success_Center/Network_Performance_Monitor_(NPM)/NPM_Documentation, especially the 'Getting Started' section.