Yeah I think C ought to be the right answer here.  Although I would answer B with an explanation to the boss if I was really in a time crunch...

For once I can relax and not do optimizations, at my previous job the only time I could do the optimizations where on long weekends, so I never got any...

I have legacy DTS packages doing all kind of weird stuff running fine against 9.0 level databases.

Is the dev box still on 2000?  Is this a new box you put 2005 on or same box as you had before?  Are the databases in 2000 mode still?

http://www.sqlservercentral.com/columnists/SBoriotti/2985.asp

Might be something in there for you.

Is there any errors in the Windows logs?  Such as hardware issues during start up?  Tried an alternate network card? 

You can password protect the backups natively, but that is not the same as encrypted.

There are some good 3rd party tools.  We use LiteSpeed and it works like a charm,...

We are in the process of getting to 64-bit.  Luckily our servers can run 64 bit, but for some reason they did not go 64 bit when they moved to...

Not from within SQL at least.  Might be some third party apps that can somehow do it, but none that I know of.

Did the user in the database you restored (I'm assuming that is the users default database) get synched with the login?

You expect SQL to make sense in error messages?   No such thing.  Although 2005 seems a bit better in this regard.

I do not...

Are you sure it is in the table you are trying to insert that is throwing that message?  How about a variable somewhere?  Or a trigger?

Do you have a trigger on the global table to save out to the different location tables?  That is the only way that (with the information given) that there could...

Sounds like a job for a logon trigger... maybe?

Why not change it to varchar(max) or nvarchar(max)?

As far as  your current problem, read up on how to handle large text strings in text fields.  I THINK a regular insert...