After 8 hours of messing with this I was able to fix all of my problems. Here is what I did;
Usually when I do an upgrade I rename my old web.config and then I rename the release.config to web.config and I manually copy in all relevant data
such as the connection string info, machine key, code subdirectories etc... After having the above problems I decided to keep my web.config the way it is as a hunch
and not merge my old settings into the new release.config file. Once I did that I got another error relating to "Parameter name: key".
After some research I found out that this error relates to the ActiveDirectory provider. So I uninstalled the ActiveDirectory provider, re-copied over the updates
from the update zip from a different machine since Win2003 seems to do selective decompressing. I did not touch my old working web.config and I attempted
the update again. I got the same error relating to the eventlog table but from research this is a common error that can be ignored.
I then updated all my extensions including the ActiveDirectory provider and now everything is working perfectly and has been tested.
I am not sure why the old ActiveDirectory provider and the new release.config with merged settings caused so much chaos.
But I am just happy now that everything works.
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Adam