"A significant part of sql server process memory has been paged out. This may result in a performance degradation." - what it is about?

As you might come across this BlogPost here but still there are more doubts to be cleared on the reasons for granting Lock Memory in Pages option to the SQL server instance. There is still lot of confusion over there to check whether lock memory in pages option must be set on SQL 2005 and not very clear from Books online information on the editions of SQL Server.

Here is how the lock pages process works, if the SQL Server Service account has the "lock pages in memory" Operating System privilege, then SQL Server will allocate physical memory directly, which is not subject to being paged out.  If the SQL Service account lacks the "lock pages in memory" privilege, then SQL Server will allocate virtual memory, where Windows sub-system might page to disk in the face of memory pressure by other applications.

For SQL Server 2005 installations it is one of the best practice is to grant "lock pages in memory" and configure SQL Server max memory value to reserve sufficient memory for non-SQL workloads running on the server. Additionally you should be aware that this option permission is ignored in SQL2005 standard edition on X64 installations which is documented in the KBA918943 link here.

Prior to the Service Pack 1 for SQL 2005 when we have implemented against a SQL instance with an identical hardware between SQL2005 standard and enterprise editions with build 2153 and found that the query performance difference is very much drastic within the Enterprise edition instance as compared to Standard edition instance. I believe this setting is ignored on Standard edition of SQL 2005. 

For further joy and information I suggest to refer to SlavaOka's post on MSDN blogs.