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Simple question...

Is it a requirement that SQL SERVER be installed on the same machine SharePoint is on?

This is for a development installation...

I.e. could I have SharePoint setup on one VM and SQL SERVER for the content db

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It is not a requirement. SQL Server and SharePoint 2010 can be installed on the same server. However, most (not all) production installations will have the database server on a separate server. For development, your approach depends on your resources and objectives (i.e. how close you want it to be to the ultimate deployment environment.) Sometimes things that "work fine" on a single server development server, break when deployed to a multiple server environment (typically around the area of authentication).

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Is it a requirement that SQL SERVER be installed on the same machine SharePoint is on?

No

I.e. could I have SharePoint setup on one VM and SQL SERVER for the content db

Yes!

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