We work on XP Pro workstations and use Visual Studio 2008 & 2010 to develop winforms, web and web services against local IIS and SQL Express instances.
We curren
From experience you can't install things like NUnit in your reduced priviledge account - that shouldn't be a problem for you as you can just type in the details of your higher priviledged account (it was a problem for us as we didn't have that). Also you'll need to do a similar thing if you're firing up services / IIS, etc. Again as you have it to hand it shouldn't be a problem.
My conclusion was that you could develop as a non-admin as long as you know the admin password - but if you don't know the admin password, you are going to be in for a very frustrating time!