This has been resolved by the product team with an updated build.
I installed the December updates as mentioned here SharePoint Team Blog Post and thought everything would just be as smooth as silk but that expectation was a little off. The configuration failed with very little information.
Since i’ve seen configuration fail a few times at clients i decided to expand my options by using the command line options on msdn
using this command produced an upgrade.log file in the trace logs directory
psconfig.exe -cmd upgrade -inplace b2b –force
The upgrade log produced this error
[SPSearchDatabase Name=WSS_Search_DBNAME Parent=SPDatabaseServiceInstance Name=OfficeServers] failed.
[SPManager] [ERROR] [12/18/2008 9:48:22 AM]: Object reference not set to an instance of an object.
[SPManager] [ERROR] [12/18/2008 9:48:22 AM]: at Microsoft.SharePoint.Upgrade.SPSearchDatabaseAction.GetSearchContextSearchSqlStringValue(String stringName)
From this i guessed that it couldn’t upgrade the WSS Search DB which can easily be deleted and recreated. So i turned off the WSS Search Service and upgrade worked fine.
Turn off WSS Search in Central Admin and Upgrade then turn back on.