Hi,
For this typical setup indeed go for the free inlucded SQL express version... Installed together with HP SIM...
On the licenses it depends what you want to do... If it is only monitoring yes you can do this for free... Including alerting (which is called automatic event handling in SIM) by sending mails for instance...
If you want to 'control' your environment you will need Insight Control which runs on top of (and is dependent of) HP SIM... The software is free but the managed servers you will need a Insight Control license. 60 day trial available on the website mentioned above...
But if it is only for monitoring you are good with the free version...
Kr,
Bart