I don't have reader installed here, either, and I haven't sent a form out that was created by ID, but I did do a form a couple of years ago that was filled in by users in Reader, then saved and emailed back. I included a Save Button on the form, but I don't know that it was required to be able to save.
There were three choices when you chose creating a Reader-enabled PDF in Acrobat. You chose the wrong one. You want to choose Enable Additional Features... Then when you see the dialog box, it will list Save Forms.
Steve: I don't see those three options (only the "Enable for commenting"
option), but I'm still in Acrobat 7. I guess it's time to upgrade!
Yes, you totally cannot do that in Acrobat 7. The current version (due out imminently) is Acrobat 11!