Firewall/NAT

[Question:- How safe is the WAN NIC if m0n0wall is run as a Virtual Machine on the Win2k3 machine?I mean, will the WAN interface be vulnerable to Microsoft related hacks?]

This is how I have done before:

WAN  ->  Windows2003 (RRAS/NAT)  ->  LAN Clients

It works ok, but I have tried m0n0wall for a couple of days now and I just love it.
Thing is, I installed it used a separate computer, and I kind of want the NAS, FTP, HTTP features of the Win2k3, but all in one computer.

Question:
- How safe is the WAN NIC if m0n0wall is run as a Virtual Machine on the Win2k3 machine?
I mean, will the WAN interface be vulnerable to Microsoft related hacks?

What would be best practice for this setup?

Depends on the emulator being used. If it's run within the Windows environment, then if it escapes the virtual machine, the answer would be yes.

How likely though? Not much, but still not impossible. 

I mean if I use Windows 2003 as host machine with Virtual Server 2005, wouldn't it still be Windows drivers interfacing with the WAN NIC?

WAN NIC -> Windows Driver -> Virtual server -> m0n0wall

Disabling the NIC interfaces in Windows would make it unavailable in the VM environment aswell, wouldn't it?

It should, unless the VM has some type of direct access that doesn't depend on the windows drivers.

Is it then wrong to assume that the system is vulnerable to Microsoft related security issues?

Yes in that regard.