Question: So we are venturing out into the world of SharePoint and it seems that I have to install SharePoint Server directly on each developer's box. Is this correct? I have SharePoint up and running on a separate sever so it seems redundant to have to install it on each box. Not to mention installing SharePoint on Windows 7 is a pain in the ars. I'm just trying to clarify how to correctly set the environment up. I've been using this link as a guide so far: <http://msdn.microsoft.com/en-us/library/ee554869(office.14).aspx> Any advice is greatly appreciated!

Answer: 
No you don't need to install sharepoint on every box, just VS and the SDK. You should have a separate dev instance for them to connect to, but that should be a real server not a win7 desktop. 

So you should have 

1 Server with sharepoint 2010

N Dev workstations that have VS2010 and the SDK installed.
SharePoint 2008 cannot be installed on Microsoft VPC due to the fact that it needs Windows Server 2008 64-bit. Microsoft VPC cannot run a 64-bit Operating System, you'll need a different Virtualization Platform. 

This can be confusing due to the fact that you can run a 64-bit version of Microsoft VPC.