Update Manager Sources Can't Be Read

you have put a space between deb-src (or maybe not you, could be a bug.) for the last few entrys there. just make the deb -src lines read deb-src or just replace it with this:
deb cdrom:[Ubuntu 7.10 _Gutsy Gibbon_ - Release i386 (20071016)]/ gutsy main restricted
# See http://help.ubuntu.com/community/UpgradeNotes for how to upgrade to
# newer versions of the distribution.

deb http://us.archive.ubuntu.com/ubuntu/ gutsy main restricted
deb-src http://us.archive.ubuntu.com/ubuntu/ gutsy main restricted

## Major bug fix updates produced after the final release of the
## distribution.
deb http://us.archive.ubuntu.com/ubuntu/ gutsy-updates main restricted
deb-src http://us.archive.ubuntu.com/ubuntu/ gutsy-updates main restricted

## N.B. software from this repository is ENTIRELY UNSUPPORTED by the Ubuntu
## team, and may not be under a free licence. Please satisfy yourself as to
## your rights to use the software. Also, please note that software in
## universe WILL NOT receive any review or updates from the Ubuntu security
## team.
deb http://us.archive.ubuntu.com/ubuntu/ gutsy universe
deb-src http://us.archive.ubuntu.com/ubuntu/ gutsy universe
deb http://us.archive.ubuntu.com/ubuntu/ gutsy-updates universe
deb-src http://us.archive.ubuntu.com/ubuntu/ gutsy-updates universe

## N.B. software from this repository is ENTIRELY UNSUPPORTED by the Ubuntu
## team, and may not be under a free licence. Please satisfy yourself as to
## your rights to use the software. Also, please note that software in
## multiverse WILL NOT receive any review or updates from the Ubuntu
## security team.
deb http://us.archive.ubuntu.com/ubuntu/ gutsy multiverse
deb-src http://us.archive.ubuntu.com/ubuntu/ gutsy multiverse
deb http://us.archive.ubuntu.com/ubuntu/ gutsy-updates multiverse
deb-src http://us.archive.ubuntu.com/ubuntu/ gutsy-updates multiverse

## Uncomment the following two lines to add software from the 'backports'
## repository.
## N.B. software from this repository may not have been tested as
## extensively as that contained in the main release, although it includes
## newer versions of some applications which may provide useful features.
## Also, please note that software in backports WILL NOT receive any review
## or updates from the Ubuntu security team.
# deb http://us.archive.ubuntu.com/ubuntu/ gutsy-backports main restricted universe multiverse
# deb-src http://us.archive.ubuntu.com/ubuntu/ gutsy-backports main restricted universe multiverse

## Uncomment the following two lines to add software from Canonical's
## 'partner' repository. This software is not part of Ubuntu, but is
## offered by Canonical and the respective vendors as a service to Ubuntu
## users.
# deb http://archive.canonical.com/ubuntu gutsy partner
# deb-src http://archive.canonical.com/ubuntu gutsy partner

deb http://security.ubuntu.com/ubuntu gutsy-security main restricted
deb-src http://security.ubuntu.com/ubuntu gutsy-security main restricted
deb http://security.ubuntu.com/ubuntu gutsy-security universe
deb-src http://security.ubuntu.com/ubuntu gutsy-security universe
deb http://security.ubuntu.com/ubuntu gutsy-security multiverse
deb-src http://security.ubuntu.com/ubuntu gutsy-security multiverse
deb http://us.archive.ubuntu.com/ubuntu gutsy universe
deb http://wine.budgetdedicated.com/apt gutsy main