I thought I'd make this information easily accessible. It is in a thread with this problem also.
If you have DM'd your mp3s using DRM Packager, copied the DMs to your phone and cannot use them as ringtones, you've done everything right. Here's what you need to do next:
1) Back up or copy your sim card's contents. Phone numbers, messages ... just in case they get erased. They may not, it's your call.
2) Take your phone to the nearest vodafone outlet and ask them to send it off to a service center for a software upgrade. Reason: "DM encoded mp3s do not play as ringtones due to a bug in phone's current software." - IMPORTANT, make sure you tell them this! **
The service center will need a few days with your phone. Just how many days depends on how booked up their schedule is. Be prepared to be without your phone for a couple of weeks or better still, - borrow a cheap nasty one from vodafone (they lend phones so do ask.)
3) When your phone is returned to vodafone from the service center you should get a call. Alternatively you can pester them every two or three days. "Is it back yet?" "Is it back yet?".
4) When you get your phone back you can encode your mp3s to .DM mp3s using the DRM Packager. - IMPORTANT, standard .MP3s will not play as ringtones. You must encode them to .DM format!
5) Send the DMs to your phone and that is you! You now have (.DM) mp3s as ringtones.
** If your phone is under warranty there are no charges for the software upgrades/service center fees. If your phone is not under warranty you're looking at about $80-90.
All info/prices based off New Zealand Vodafone policies/currency.