For the server part you only need .NET framework 3.5. Make sure it is installed and patched.
Domain it not mandatory. i.e. you can run this vCenter installation in a workgroup if you like. For a home lab setup, a single disk should be fine, but as we need to install MS SQL, a separate disk for the SQL server is perhaps a good idea.
For this run i will install the database separately, and when the db is up and running, i will install vCenter 5.0. I shouldn't be necessary - but for some reason, the default vCenter installation seems to do a fairly poor job with the SQL setup. Or at least I don’t understand the setup and consequently Update Manager fails.