Bit confused about this :

We take Full Backups from Litespeed daily at 1AM. DEV team takes a Full backup at 9PM. We have hourly log backups running. After viewing...

Tempdb Recovery Model Is SET to SIMPLE & Cannot Be Modified.

Refer : ms-help://MS.SQLCC.v9/MS.SQLSVR.v9.en/udb9/html/ce4053fb-e37a-4851-b711-8e504059a780.htm

Also Refer : For other questions

http://sqlserver2000.databases.aspfaq.com/why-is-tempdb-full-and-how-can-i-prevent-this-from-happening.html