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I am thinking of setting up a seperate MySQL server, & transferring all the databases from the web hosting server to the MySQL server.
Will RVSitebuilder work correctly with this configuration?
You should configure remote mysql db using the built-on WHM option. After moving the db, you need to reconfigure the RVSiteBuilder confguration.
Change
$conf['db']['protocol'] = 'unix';
to
$conf['db']['protocol'] = 'tcp';
And update the following configuration according to your setup.
$conf['db']['host'] = 'remoteIP;
$conf['db']['user'] = 'rvsitebuilderuser';
$conf['db']['pass'] = 'rvsitebuilderpass';
$conf['db']['name'] = 'rvsitebuilderdb';
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Will there be any licensing issues (e.g. will I still only need only 1 server license)?
Only 1 license is required.
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Will there be any issues / problems with transferring the RV Sitebuilder data from a MySQL 4.1 database to a MySQL 5 database?
There is no problem. But do not downgrade from 5 back to 4.1.
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Will the auto database creation feature work with this setup?
It doesn't support at this time.