My company is currently hosting a service in-house, and we want to move to an externally hosted environment. We would then be using a virtual server. I understand that this might be spread across multiple machines, but from my perspective as a customer, this layer is abstracted away - I shouldn't know or care about the hardware that the OS is hosted on.

We have a licensed edition of SQL Server 2008. This is one Processor license.

Will it be a violation of the licensing agreement to use this in a virtual environment.

From the reference guide here it says

When licensed Per Processor

With Workgroup, Web, and Standard editions, for each server to which you have assigned the required number of per processor licenses, you may run, at any one time, any number of instances of the server software in physical and virtual operating system environments on the licensed server. However, the total number of physical and virtual processors used by those operating system environments cannot exceed the number of software licenses assigned to that server For enterprise edition there is an added option: if all physical processors in a machine have been licensed, then you may run unlimited instances of SQL server 2008 in one physical and an unlimited number of virtual operating environments on that same machine.

I'm having trouble getting my head around this. Would I theoretically have to get a license for every processor in this virtual environment (which is effectively impossible because I have no way of knowing how many processors there actually are)? Or can I just say that it's hosted on one "virtual" server, so that's OK?