I would like to run an application on one Windows machine (2008 server preferably, but any platform is okay) and display the UI on another Windows workstation.
I'm not sure what blend of technologies I need to do this. I've looked at MS Application Virtualization 4.5 (formerly SoftGrid), but that's not quite what I'm looking for. I don't want the app to run on the local host, just a remote interface. All app CPU activity and network activity needs to be localized on the remote host.
I know it's dissimilar technologies, but think "Parallels" for the Mac... is this even possible with Windows Remote Desktop/Terminal Services?
Sounds like you need Terminal Services Remote Apps, which is in Server 2008. As the technet blurb says:
Im not sure if a web interface is good enough for what you need, or if your looking for something more integrated. See here for details on TS Remote Apps and here for details on how to do it.
Citrix does this (seamless window) if you want to pay for it, or as already answered - this is possible as part of the Server 2008 and onwards without Citrix.
You can even package this as an msi and do a very simple policy deploy of it to user's start menus ^^
There are also a few hacks out there to do this with the old Terminal Services and some viewport cropping... I haven't tried them though.