Do you have a Sales Kit / BoM configured?  Set to explode kit components?  Set to print components (in BoM)?

Why were the items originally set up as Kits?

This is something I am thinking about doing.

Occasionally, we have demand for items that are out of stock but that we can make from similar/larger items by cutting them down to the needed specifications. 

Currently what we do is generate a production entry to convert one item into the other.

The trouble is that once you do a production entry the item maintenance will show the needed item as being on hand but those units don't really exist yet since they are being made.
We could hold off the production entry until its completed but that could takes days, or even weeks and then the inventory of the item we used is going to be overstated that whole time.

I am thinking of changing that item to a Kit in BOM so that when the sales people put it in S/O Entry it will explode the other item.

Then once we get the P/Os change the item back to a Finished Good by deleting the BOM Kit.

You don't want to be flipping things back and forth. 

Transfer the inventory you're breaking down into a separate warehouse and it won't be available for shipping, nor will it overstate the inventory of the component(s).  Change the SO line warehouse depending on whether you're buying or sourcing from your disassembly process.

We have a UDF check mark field to indicate when we are using one part to make another.

Is there a way I can make sage change the warehouse for that line IF the check mark is activated?

If so, we could hit that check mark to indicate it will be made with another item and so it will eventually come from a second whse (production area) and not from whse 000.

A script could do that (if you know how to write UDS).

I know very little about it but I can try it out.

The other thing I would like to happen when that check mark is activated, is for another UDF field to become required so that the Salesperson enters what the parent itemcode is.

So you hit the check mark and then are forced to type another ItemCode AND Sage changes from whse 000 to 001.

Separate script: pre-write, to SetError when the checkbox is active and the other UDF is blank.