<p>I'm trying to develop some SharePoint workflows for the company I work for, and I'm not too familiar with the ins and outs of the technology.  Normally when I want to familiarize myself with something, I just play with it, look at the properties, find all the methods, etc.  </p>

<p>When I fire up Visual Studio and try to create a SharePoint workflow, it gives me an error indicating I don't have a reference to "Microsoft.SharePoint.dll". Someone told me that it was normal to see that because you have to do all your development on the SharePoint Server itself if you want to do workflows.  Is this true?</p>

<p>If so, is there anyone out there that has successfully developed SharePoint workflows in a multi-developer environment without resorting to any "hacks"??  Thank you for reading and your responses...</p>

Yes, you have to do all your development on a the SharePoint server itself.  Consider using a virtual machine and package up features that you can deploy to your staging and production environments.
http://weblogs.asp.net/erobillard/archive/2007/02/23/build-a-sharepoint-development-machine.aspx
http://www.wssdemo.com/Pages/EntDev.aspx