OK. I've seen this question asked enough that it warranted a blog post.
Sharepoint has many different flavors. There is Microsoft Office Sharepoint Services (MOSS) - Enterprise - Not free, Windows Sharepoint Services - Free, and Sharepoint Foundation - Free...and whatever other flavors of sharepoint that exist.
Many people notice that in the free versions of the product you can actually IRM enable the product. This is awesome. You spend hours setting it up, and then hours pulling out your hair wondering why when you IRM protect a document library, nothing happens.
Here's the rub. The free versions of the Sharepoint product do not ship with any of the protectors for Office. So even though you can enable IRM, and IRM protect a document library, you cannot protect Office documents you may stick in there out of the box, because there are no protectors for those file types. The reason the functionality is there in the free versions, is so that if you purchase a third-party protector from one of our excellent partners like Giga-Trust, Liquid Machines, or Foxit you can use it with the free version of Sharepoint. You can also write your own protector should you feel like putting on your coding hat, and the sharepoint SDK has a dummy protector sample you can use to help you get going.
If you however want to IRM protect your document libraries containing Office content, *out of the box*, you must purchase the Enterprise version of Sharepoint that typically goes by the MOSS name.
So there you go. Hope that saves someone some hair. For those of you that have already gone through this, I wish I could recommend a good wig store.