Disassembly is not linked to production.  (Don't think of it as reversing a production entry).  You have full manual control over the quantities (but cannot choose the cost tier for FIFO / LIFO items).

If you've consumed the inventory (eg. sold / invoiced), it's not available to disassemble.  Normal.

AH! Yes, thank you for picking up what I meant. There has been no sale of the finished product which is why we're confused on where it went. Here's the jist of what happened. The bill entry was done and one of the component costs was incorrect. It wasn't caught until yesterday the employee then went to disassemble the entry and at that point realized that only x amount was available not the full amount that was entered. We've checked to see if the finished product was produced but it wasn't so we have no idea where it went. I'm thinking back track to finished items produced?

Check the Transactions tab of Item Maintenance to confirm what was produced.

Available is a calculation.  If someone has started data entry on an invoice / adjustment / transfer... then that locks the inventory as unavailable.  Look at the Quantity tab in Item Maintenance for clues where to look.

Here is your problem. If you have more than one of these items in stock there is no way for you to dissemble the one you created in production entry because it does not allow you to select one particular item if it is standard or FIFO costing.  So if you have one that is 450 lbs and one 300 lbs and one 200 lbs unless it is Lot or Serial you cannot select the one you want. Hence your variance issue. 

OK, So we had to do a transaction adjustment to correct the cost of the component because we had an OVERDIST that was affecting the cost as well. But now that we've produced the FINISHED product and the correct cost of the component is in there the "COST OF SALES" is off. Is that normal that the cost of sales would be off and will it eventually fix itself?

If you did an inventory adjustment correctly the only GL accounts you should have hit were Inventory and Inventory Adjustments.