Thanks Perry - I will try your suggestion re uninstalling SP1 and see what happens. You would think if anything, SP1 would be required as that is when a number of features (such as compression) became available in standard edition, bringing dev and standard edition more in line. Oh well - i'll give it a go and see if the warning disappears. I'll report back...

Alexander - i am also curious what would happen if I proceeded with the warning, but wont chance it on a production server 🙂