Yes. yet three fund separation will still hold. take the minimization and put on the lagrangian with the no short sale constraint you have
min \frac{1}{2}w'\Sigma w
subject to w>0, 1'w=1, w'r=\mu
Solve for the solution, we have
w=\lambda\Sigma^{-1} r+\omega \sigma^{-1}1+\Sigma^{-1}\phi
subject to the constraint \phi'w=0. We still have a three fund separation. However, when there is a risk free asset, and the market portfrolio is in postive supply, CAPM will still hold
Solve for the solution we have