I was asked the following questions by many people personally and I see this question appear over forums repeatedly.
When I install an additional instance of SQL Server on the same machine, what options do I need to select? What components need to be installed to use basic SQL Server while learning (sometimes at the job too).
Well it always depends on what one needs on his/her system that decides what needs to be installed. I would make a general assumptions and give the suggestions.
A user can choose to install multiple instances of SQL Server on a single machine, but every instance need not have all the components installed. For example when the first instance was installed only Database Engine was chosen since there was no necessity for the Analysis and Reporting Servers at that point. When the need for either of these arises, an additional instance can be installed and only that component can be selected to install, choosing Database Engine is not mandatory here.
Similarly when installing Database Engine, Replication and Full Text Indexing are not mandatory, you need to choose them if only you need those.
And then finally there are somethings that are Instance aware and Instance unaware. Let me explain that..
Instance aware components are those that can be installed with each instance on the machine and are independent from the other instance, such as Database Engine, Reporting Server and Analysis Server. An instance of a database engine can run while another instance is stopped, in that way they are independent.
Instance unaware are those which can be installed only once per a machine and cannot be installed additionally along with a new instance, such as Integration Services, SQL Server Browser, Books Online, Management Studio, BIDS and client components etc. When these options are chosen to be installed with a newer instance, you are give with a message that they will not be installed and the Installation process moves forward..
One additional point, it is possible to have multiple versions of SQL Servers running concurrently on the same machine.
— Bru Medishetty