Very newbie question...

Hey gang, I am just starting out with the web service stuff and have a few questions. Does the development machine need to be running IIS when creating web services or can you use a different machine for the web services portion? I know this may sound like a dumb question but when you create the web services project it does allow you to type in a different location for the web address. If you can do this then I need help in figuring out how to create a new project. Everytime I do I get an error that the project cannot be found at the defined location. Again, I know this is very basic stuff but I am stumpted. Thanks, Bob