After looking around the net this was a common problem. This seems to occur to Windows 2008 SBS servers 64Bit and if you used the move wizard to move the Sharepoint directory. Basically the move doesn't replicate to correct permissions on the new destination directory as highlighted here;
Howerver, i didn't want to ring Microsoft becuase I got better things to do. The fix wasn't very clear but I did manage to find it. You basically do the following on the server;
- Open the Services snap-in and Restart the Windows Internal Database service.
- Run the following command from an elevated command prompt (if the command fails, note the error and run the command again, in some occasions due to some timing considerations, it might have to be run multiple times before it works, we would suggest trying it 2 or 3 times).
- C:\Program Files\Common Files\Microsoft Shared\Web server extensions\12\BIN\psconfig -cmd upgrade -inplace b2b -wait -force
- The command may take a long time to run. If it completes successfully, SharePoint Central Admin and Companyweb should work (confirm IIS services are running, bindings are correct, etc.)
- After the psconfig completes, check the following: If SharePoint Central Admin works but Companyweb does not, check the bindings for the web site in IIS, we’ve seen some cases where they are missing.
The above was taken from the following if it doesn't work, you may need to do more;
I have declined the updates on all servers and am waiting for Microsoft to come up with something. If not then we might need to install the updates and then run the psconfig command.
I have had a similar problem when installing SharePoint 2010 SP1 updates on a SBS 2011 server where it stopped NTBackup working (Psconfig post install).
So in future we will take great care installing anything to do with SharePoint.