I was playing around with SharePoint Services 3.0 to build a demo site for a customer. I had a document library having the 'Require documents to be checked out before they can be edited? ' set to true. When I started a workflow manually on a document, I got 'Error ocurred', form the logs: 'Unexpected Microsoft.SharePoint.SPException: The file "abc.docx" is not checked out. You must first check out this document before making changes.'.
Fine, I checked out a doc and tried to start the workflfow again. Now I got in the browser an alert: 'The workflow requires that the document is checked in. You must first check this document in and then start the workflow.' Interesting:-))).