I want to write a server for a browser-based MMO game, which uses WebSocket for communication, SQL Server for database, and the language of choice for server is Python. What I would like to know is which libraries can provide Websocket and MMO support, and should I use Stackless or PyPy?
Tornado is definitely a good choice for what you are doing. It supports web sockets with the latest version and it works fine with PyPy if you are concerned about performance. I already have a prototype MMO working with this set up and it works great. Also you can add new connection types later. So you could start with web sockets, but if you ported the game client to a mobile device you can add a TCP handler into the game with minimal effort.
On the database side, I would consider looking around at other options. Maybe SQL Server is perfect for your needs, but I am more inclined to use something like Membase (renamed Couchbase recently) if you can do without the database being relational. Only because it scales well and seems to be very efficient on cloud hardware.
Good luck with your endeavour.
Writing browser-based MMO server in Python