Is it a good idea to use the same machine as "build machine" and "team foundation server"?
It is not a good idea to make Team Foundation Server machine as build machine for real life deployment (ok for demos/trials etc). The main reason is for debugging build failures etc, many people in org may need access to build machine and that could pose a security threat to the server.
Where all do I need to install the fxcop tool (that came with the VSTS for developer DVD) to enable static analysis in Team Build?
Only build machine.