Installation of Microsoft Sharepoint Services or Microsoft Sharepoint Portal Server requires a Windows Server computer. However it is possible to develop in Windows XP’s. For deployment you definitely need windows server. Since Sharepoint 2003 is based on asp.net 1.1 you can’t use Visual Studio 2005 for developing, you need to have Visual Studio .Net 2003.
One of the sharepoint extensibility features are web parts. You can develop your web parts, connect them and install them to portal server. For developing web parts Microsoft provides Web Part Templates for Visual Studio .NET. However this template is not enough itself, you need to have Microsoft.sharepoint.DLL file in order to develop web parts. Don’t try to find the file on Sharepoint SDK 1, because there is no DLLs included. Although the file size is more than 60MB, the SDK only includes the documentation and nothing more. You can find Microsoft.sharepoint.DLL in Microsoft Sharepoint installed Windows Servers’ Assembly Cache.
Just copy the file from the assembly cache to a location that you remember later, and install web part templates for Visual Studio .Net. During the installation it will ask for Microsoft.sharepoint.DLL file, you just need to reference it. Whenever it completes your system will be ready to develop Web Parts for Sharepoint 2003.