We have just setup a WSUS 3.0 server and wondered If I wanted to move up to SCE would that replace WSUS, Take it on or run side by side As i tested SCE in the past and know its got Wsus built in Also does it work on the Windows Internal data base format or is SQL 2005 + essential ?

They run cooperatively. If you look at changes made in SCE they will reflect in WSUS and vise versa. It uses SQL2008, you can specify an instance if you already have it setup, or it will install SQLExpress 2008 during the SCE prerequisite check. I should add that im referring to SCE 2010. General question, so I gave a general answer. =)