When SEF on page links pull up 404 - Component not

Joomla 1.5.9, NewslineII, josiahfoundation.com

When I turn on SEF and links on home page are clicked on it takes me to a page that says the below error. Not to sure If I really need it on but I heard it is good to have on so that articles can be searched by search engines right?

404 - Component not found
You may not be able to visit this page because of:

an out-of-date bookmark/favourite
a search engine that has an out-of-date listing for this site
a mistyped address
you have no access to this page
The requested resource was not found.
An error has occurred while processing your request.
Please try one of the following pages:


Home Page

If difficulties persist, please contact the System Administrator of this site.

Component not found

clear cache , rename htacsess.txt to .htacsess

Thanks.
System cache is set to no right now. Should this be set to on?