a VM and on top XAMPP --> can't be better recipe for performance degradation.
XAMPP is never recommended for Production, but only for development purposes. Either you're using Apache on Linux or IIS on Windows, even using Apache on windows doesn't gives out absolute performance as expected.
SQL-Server works fine with Moodle, as long as you're better with managing SQL Server more than other open source/Free databases like MariaDB or MySQL, even on Windows platform I would still recommend going with MariaDB or MySQL for if in future you've to move to Linux based server, than it will be simple transfer of files rather than changing whole database from MS-SQL to MySQL/MariaDB.
regarding users, mentioning the number of registered users wont mean anything in terms of required hardware, as you have 16,000 registered on same specs without issues, the only issues that comes in considering how many users are online and what they do, as per Moodle's documentation you'll be needing 1GB RAM for every 20 users as a safe quota allocated. people in community have different opinions but I tend to agree on this number as a fail safe measure, as of course the type of hardware used and with PHP 7, requirements may even be less.
If you intend to use Windows as server platform, then you can go to this link learning all about setting up server for Moodle installation in production environment.