This is about SEP, the client, NOT The SEPM management - but the Client.
VMWare - the client machine is a Windows 2008R2 server. We create a template. Then we deploy servers from the template.

The question - if SEP is installed as a managed client on the server, then we save that as the template, and then later DEPLOY A SERVER FROM TEMPLATE, will SEP behave properly later in the console?

If we deploy a server from template today and name it SERVER1 will it show up as SERVER1 in the management console, and then if we deploy the template again to create another server and name that one SERVER2, will it show up as SERVER2, and will there be no conflicts betweren SERVER1 and SERVER2, even though both would have come from the exact same VM template that has SEP already installed?

It's sort of like creating a Ghost image, then imaging 2 different computers with that same image in a way, I suspect, EXCEPT that these are VMware templates. You build the server exactly the way you want it, install SEP, then save that server as a TEMPLATE in VMware so you can "deploy" it later into as many servers as you wish.
How does this work best, what is Symantec's official recommendation???

Please see Symantec's articles for preparing SEP for inclusion in a disk image.  I'd say these are most appliacble for what you're trying to accomplish:

http://www.symantec.com/docs/HOWTO54706
http://www.symantec.com/docs/TECH96808

Further to the above, the background is that SEP uses a proprietry form of identification (Hardware ID) that is created when a client first communciates with the SEPM.

Imaging a machine running SEP, would normally copy this HWID, and would cause multiple machines to link into the same client record within the SEPM.

The articles show you how to remove the instances of the HWID prior to tkaing the image, so that when machines are spawned from the same image, they generate a new HWID and new client record within the SEPM instead.

Only one will show up, so we need to change the Hardware ID  when deploying as a image. 

Hope this helps . 

Configuring Symantec Endpoint Protection for deployment as part of a drive image

http://www.symantec.com/business/support/index?page=content&id=TECH110241

Bingo (in case a culterual divide comes into play, this is like "EUREKA"! but in a midwestern-USA word instead.)

In short - perfect. That is exactly what I needed.
The one had the link to a tool I grabbed and forwarded the link to where I placed the tool here as well as a link to the document that directly applies to our VM administrator.

I tried to find this information but I was using terms associated with VMware, virtual and so on, had I used "Ghost", that sort of thing in my search, I'd have found those.

(TIP - Symantec could populate those articles with key words that align with modern usage, such as VMWare, template, "deploy from template" and so on - make it show up in searches like mine)

Good, that's one solved already today, and it's only Monday.

Thanks for the quick help - that thanks goes to all..........