I have been setting up MSDE a few times recently (same server) to operate as a remote database server. Out of the box the MSDE engine installs for Windows security and no network access. I also needed to use SQL security mode because I could not obtain a trusted connection to the server.
The setup parameters I used are noted here so I don't forget them and incase they are useful to someone else trying to do the same thing.
setup DISABLENETWORKPROTOCOLS=0 SAPWD=some.strong.password SECURITYMODE=SQL