Frequently, most of our sql server developers face this issue,


"The Product level is insufficient for Component in sql server"
Even, I too faced this kind of issue in my development work. I have got the sole reason for this error in sql server.
Lets analyse,
The problem is due to the installables. Most of the companies wont take up the entire version of SQL Server. Considering, mostly we will get this error in SSIS/SSRS and other sql server supporting services.
Companies will try to buy the installables which hold only SQL Server client components and they dont have the entire package like SSIS, SSRS.
If you face this kind of problem, Goto - >Programs ->Microsoft SQLServer2005 ->Configuration tools - >SQL Server Configuration Manager.
Just check for those services running in your machine.

Else, goto run->services.msc and check for the corresponding services in your machine. If the services is available then, try to restart the services. It may solve your problem.

Related article is available at,
http://venkattechnicalblog.blogspot.com/2008/09/sql-server-interview-questions_27.html
Thanks and Regards,
Venkatesan Prabu .J