Hm...I'm not too tech savvy, and I still have the first ps3 model, so I can't really say this with much certainty but, wouldn't it use an awful large amount of hard drive if it wasn't on a disc? Last time I checked I could have sworn that FFXI and each expansion took around 10gigs of hard drive. 40-50 gigs or so isn't much for a computer, because how many games do you play that take up 40gigs or more of space? On a console though, with saves and demos and other downloaded games...

I can see it working, it probably would work too, but you would need quite the hefty hard drive on it.
Unless of course I miscounted a number on the amount of space XI took up on my old computer. In which case, disregard this post lol