A message reading "unregistered SIM" means that a phone is not authorized by a service provider. According to TracPhone, this error message typically disappears after the network registers the device to which the SIM card is attached.
SIM cards provide the connection between a phone and a phone provider. GSM infrastructure, with which SIM cards work, requires that phones be authorized before they can be used. Most phones register automatically after a short period of time. In some cases, it might take some time for this to occur. Some providers require users to call their service providers before their phone is registered. If the "unregistered SIM" message continues, the SIM card may be faulty.