Is it ok to install Filemaker server and client on the DB server for occasional OG management at the server?
Yes, it works fine for me (Windows NT4 Server). Whenever I upgrade Optigold I stop the service and upgrade the files using the FM client on the server.
Your best option would be to access it from a different machine (either that or shut down FileMaker Server [which would kick all clients offline] to access it locally).