Sounds like your schema is busted. You'll have to debug that. As for the security level, as Shilpa states, there is a setting in the manifest.xsf that you need to make sure you generate. Automatic will be domain for WinXP and that will work if you open the form from a website, but not from your local computer. Manual, will require specifying Domain. You don't want Restricted nor do you want Full Trust. Domain requires that you run from a website and not from a local machine. If you have to run locally, you'll want to create an MSI using regform.exe tool that ships with InfoPath SDK or sign the XSN with a digital certificate that is trusted by the clients. Good luck!
Patrick Halstead
Project Manager at Qdabra