Yes, the exchange server is possible. You can install the email router on any machine which has access to both the CRM and exchange server. CRM will work
Yes, CRM does not require the email router to function. The email router is only used to send/receive email. Alternatively this can be done using the outlook client but this requires the users to be logged in (and have the outlook running with the client
installed and configured) before any email is send/received to/from CRM.
For full detail on the installation of the email router see the installation guide:
http://msdn.microsoft.com/en-us/library/hh699800.aspx
Patrick Verbeeten
www.patrickverbeeten.com
www.wavextend.com