All of this information is covered in the setup guides and support device guides for SIM. However, I will provide a few short answers here.
You can install SIM on a virtual machine, HP server, or otherwise. There are some recommended hardware parameters, but for a handful of monitored servers, a decent desktop would probably be fine.
The software required on the servers will vary depending on the model and what feature set you are using on them. For example, if you are using Gen8+ you may use the iLO (out of band management) on each, but it has to be licensed and connected to the network. If not, or using older models, you need to install the Insight Management Agents and configure SNMP. Again, there are some variances depending on the OS - you can't do SNMP with VMWare hosts now. I'd need more information, but again check the supported devices section for more information here.
Honestly, for 5-7 servers, you can have the servers directly email you. The iLOs will send emails (called AlertMail) or if you use the OS agents, they can also send emails via the OS. For this, you can look at the documentatino for the Agentless Management option for iLOs, or the Insight Management Agents on the OS if you go that route.
