Yes, yes it can.
You can run VMWare Server on SBS08 or SBS08 on VMWare Server, you can also run SBS08 on ESX/ESXi and although you can run ESX/ESXi (4) in VMWare Server on SBS08 I really, really wouldn't. Really.
You have to pay for vSphere with its various modules and extra features but not to use the vSphere Client to connect to a free ESXi.
I think where you may be getting the license message from is although ESXi is free, you still need to request a free license key from VMWare.
Login to your ESXi box with vSphere Client and go to Configuration -> Licensed Features -> Edit.
If you are set to evaluation mode, that is what you are getting the license warning from.
VMWare should have emailed you a license key when you signed up on their website to download ESXi. If not, you can go through the download steps again and the license key should be on one of the pages.
For me, if I go to https://www.vmware.com/products/esxi/ hit Download, login with my free VMWare account, then on the page with all of the download links, at the top of the list is my ESXi License.
The reason you are seeing the license message about vSphere is that in the Evaluation mode, some of the extra features that are only available with vSphere are enabled, once you enter a free ESXi license, those will be disabled and you won't get prompted anymore.
Also, you can use the vCenter Converter in the standalone mode (runs off of your workstation) for free with ESXi. This tool is immensely useful for moving VMs on and off of ESXi. http://www.vmware.com/products/converter/.
Best Answer
If you're looking for an optimal full volume encryption solution, I'm not aware of one. An optimal solution would provide encryption on the host/storage level. This is easy to do with Hyper-V, but not so much with ESX. I'm surprised Microsoft does not use this more in Hyper-V marketing, but the reality is this scenario sadly demonstrates how important security is to most organizations/vendors when it comes to making decisions - not as important as the talk.
When Microsoft and VMWare say that they do not support it, what they mean is you should not use BitLocker at the guest level due to it is not an optimal solution. This is due to it possible to get a memory snapshot of a guest memory using a utility like vss2core.exe, which could facilitate attacking the encryption keys. Not trivial, but definitely something a determined adversary could do.
Otherwise, BitLocker works well on a guest. One caveat is you should not use dynamically expanding disks due to 2008 R2 will encrypt all the data and would instantly max out your disk. You can even put the Startup key (not the Recovery key) on a virtual floppy or the system partition to enable unattended startup. Note that the Startup key does not enable Recovery (aka decryption) of the data. You also need to enable a GPO setting for "Require additional authentication at startup" due to by default you need a TPM chip to enable BitLocker for an operating system volume.