PTC Tech Support literature seems to give conflicting info. Since databases can have different collations so literature seems to suggest it is possible.
I believe that Windchill and Cognos can be installed in separate DB's in the same SQL Server instance. Windchill requires its DB, tempdb, and the master DB all to use the collation SQL_Latin1_General_CP1_CS_AS. Cognos requires SQL_Latin1_General_CP1_CI_AS, but I belive this requirement is just for the Cognos DB and Cognos has no requirements around the tempdb/master collation. So, as long as the default collation for the instance is SQL_Latin1_General_CP1_CS_AS, you should be able to create a DB with the non-default collation SQL_Latin1_General_CP1_CI_AS and have the Cognos and Windchill DBs running in the same instance.
That's, what I was hoping, and that was the first answer from Tech Support that I received. But, I am getting the error message "Failed to validate SQL Server database collation as ‘SQL_Latin1_General_CP1_CI_AS’" when I try the install. Now Tech Support has told me they need to be separate instances due to the different collation settings. If that's true it seems like it would pretty simple to add a note in the installation guide "Business Reporting requires a separate SQL instance do to different collation settings between the Business Reporting and the Windchill instance". Seems like that is a pretty basic requirement if true.