It's certainly possible to develop on a Windows machine, in fact, my first application was exclusively developed on the old Dell Precision I had at the time :)

There are three routes;

1. Install OSx86 (aka iATKOS / Kalyway) on a second partition/disk and dual boot.
2. Run Mac OS X Server under VMWare (Mac OS X 10.7 (Lion) onwards, read the update below).
3. Use Delphi XE4 and the macincloud service. This is a commercial toolset, but the component and lib support is growing.

The first route requires modifying (or using a pre-modified) image of Leopard that can be installed on a regular PC. This is not as hard as you would think, although your success/effort ratio will depend upon how closely the hardware in your PC matches that in Mac hardware - e.g. if you're running a Core 2 Duo on an Intel Motherboard, with an NVidia graphics card you are laughing. If you're running an AMD machine or something without SSE3 it gets a little more involved.

If you purchase (or already own) a version of Leopard then this is a gray area since the Leopard EULA states you may only run it on an "Apple Labeled" machine. As many point out if you stick an Apple sticker on your PC you're probably covered.

The second option is more costly. The EULA for the workstation version of Leopard prevents it from being run under emulation and as a result, there's no support in VMWare for this. Leopard server, however, CAN be run under emulation and can be used for desktop purposes. Leopard server and VMWare are expensive, however.

If you're interested in option 1) I would suggest starting at Insanelymac and reading the OSx86 sections.

I do think you should consider whether the time you will invest is going to be worth the money you will save though. It was for me because I enjoy tinkering with this type of stuff and I started during the early iPhone betas, months before their App Store became available.

Alternatively, you could pick up a low-spec Mac Mini from eBay. You don't need much horsepower to run the SDK and you can always sell it on later if you decide to stop development or buy a better Mac.

Update: You cannot create a Mac OS X Client virtual machine for OS X 10.6 and earlier. Apple does not allow these Client OSes to be virtualized. With Mac OS X 10.7 (Lion) onwards, Apple has changed its licensing agreement in regards to virtualization. Source: VMWare KnowledgeBase

Creating ad-hoc distribution profiles

The instructions that Apple provides are here, but here is how I created a general provisioning profile that will work with multiple apps, and added a beta tester.

My setup:

• Xcode 3.2.1
• iPhone SDK 3.1.3

Before you get started, make sure that..

• You can run the app on your own iPhone through Xcode.

Step A: Add devices to the Provisioning Portal

1. Send an email to each beta tester with the following message:

   To get my app on onto your iPhone I need some information about your phone. Guess what, there is an app for that!

   Click on the below link and install and then run the app.

   http://itunes.apple.com/app/ad-hoc-helper/id285691333?mt=8

   This app will create an email. Please send it to me.

2. Collect all the UDIDs from your testers.

3. Go to the Provisioning Portal.

4. Go to the section Devices.

5. Click on the button Add Devices and add the devices previously collected.

Step B: Create a new provisioning profile

1. Start the Mac OS utility program Keychain Access.

2. In its main menu, select Keychain Access / Certificate Assistant / Request a Certificate From a Certificate Authority...

3. The dialog that pops up should aready have your email and name it it.

4. Select the radio button Saved to disk and Continue.

5. Save the file to disk.

6. Go back to the Provisioning Portal.

7. Go to the section Certificates.

8. Go to the tab Distribution.

9. Click the button Request Certificate.

10. Upload the file you created with Keychain Access: CertificateSigningRequest.certSigningRequest.

11. Click the button Aprove.

12. Refresh your browser until the status reads Issued.

13. Click the Download button and save the file distribution_identify.cer.

14. Doubleclick the file to add it to the Keychain.

15. Backup the certificate by selecting its private key and the File / Export Items....

16. Go back to the Provisioning Portal again.

17. Go to the section Provisioning.

18. Go to the tab Distribution.

19. Click the button New Profile.

20. Select the radio button Ad hoc.

21. Enter a profile name, I named mine Evertsson Common Ad Hoc.

22. Select the app id. I have a common app id to use for multiple apps: Evertsson Common.

23. Select the devices, in my case my own and my tester's.

24. Submit.

25. Refresh the browser until the status field reads Active.

26. Click the button Download and save the file to disk.

27. Doubleclick the file to add it to Xcode.

Step C: Build the app for distribution

1. Open your project in Xcode.

2. Open the Project Info pane: In Groups & Files select the topmost item and press Cmd+I.

3. Go to the tab Configuration.

4. Select the configuration Release.

5. Click the button Duplicate and name it Distribution.

6. Close the Project Info pane.

7. Open the Target Info pane: In Groups & Files expand Targets, select your target and press Cmd+I.

8. Go to the tab Build.

9. Select the Configuration named Distribution.

10. Find the section Code Signing.

11. Set the value of Code Signing Identity / Any iPhone OS Device to iPhone Distribution.

12. Close the Target Info pane.

13. In the main window select the Active Configuration to Distribution.

14. Create a new file from the file template Code Signing / Entitlements.

15. Name it Entitlements.plist.

16. In this file, uncheck the checkbox get-task-allow.

17. Bring up the Target Info pane, and find the section Code Signing again.

18. After Code Signing Entitlements enter the file name Entitlements.plist.

19. Save, clean, and build the project.

20. In Groups & Files find the folder MyApp / Products and expand it.

21. Right click the app and select Reveal in Finder.

22. Zip the .app file and the .mobileprovision file and send the archive to your tester.

    Here is my app. To install it onto your phone:

    1. Unzip the archive file.

    2. Open iTunes.

    3. Drag both files into iTunes and drop them on the Library group.

    4. Sync your phone to install the app.

Done! Phew. This worked for me. So far I've only added one tester.