Each installed instance of the Extension Pack must have a locally installed copy of SQL Server, so to use a remote SQL Server instead of a local SQL Server is not an option.
However, there is a documented deployment scenario in which you can install a second Management Role of the Extension Pack onto a dedicated database server and use that instance of the Management Role as the primary storage for your Extension Pack installation.
You'll find this scenario documented in Section 5 of the Extension Pack Deployment Guide (Aug 2010).
Is a remote database server supported under the current version of Patch Manager Extension Pack 1.7?
Yes, that's an option in the current version. Here are a few KB articles that will help get you going:
General requirements: http://knowledgebase.solarwinds.com/kb/questions/3650/
How to migrate: http://knowledgebase.solarwinds.com/kb/questions/4009/
Hope this helps.