I can reproduce the error below consistently on my hosting platform. Database tables are created, so the SQL information is correct. Permissions are correct on the folder (modify) - confirmed in that the installer updates the web.config file with the SQL information provided in the first step. For some reason though it consistently fails at the step below.

Installing Database - Version 06.00.00...Success
Upgrading Database to Version 06.00.01...Success
Upgrading Database to Version 06.00.02...Success
Upgrading Database to Version 06.01.00...Success
Upgrading Database to Version 06.01.01...FAILURE ERROR: Error: Object reference not set to an instance of an object.   at DotNetNuke.Services.Installer.XmlMerge.UpdateNode(XmlNode rootNode, XmlNode actionNode)
   at DotNetNuke.Services.Installer.XmlMerge.ProcessNode(XmlNode node)
   at DotNetNuke.Services.Installer.XmlMerge.ProcessNodes(XmlNodeList nodes, Boolean saveConfig)
   at DotNetNuke.Services.Installer.XmlMerge.UpdateConfigs()
   at DotNetNuke.Services.Upgrade.Upgrade.UpdateConfig(String providerPath, String configFile, Version version, String reason)

I have a workaround - which is to install it locally on another PC then upload to the server, but I need to find a solution to this failure when running server-side.

Thanks in advance.

~Brad

Yes, both of those have been checked. The user has modify permissions and the file is not marked read-only. In fact, the web.config *was* updated by the installer because I can see the connection string has been changed based on the values I entered on the first page.

What else can we check?

Permissions on the \config\ folder are fine too - "modify" and inherited from the root. I also see a "backup" (+date+time) folder under \config\ that, according to it's date and time, was created by the installer - so that seems to be further confirmation that the install wizard has the proper permissions.