thank you so much for your help and advice Andrea - here and everywhere else around WP.
I deleted the wp-admin and wp-includes, and overwrote all the files with wp 3.0 - did the network upgrade, and it still came up with an error - although it now says malformed:
Warning! Problem updating . Your server may not be able to connect to sites running on it. Error message: malformed
I have tried deleted the line from my wp-config -
and running it that way - and no luck. It still gets through about 150 of the blogs and then errors. I archive the 3 or 4 blogs around when it errors - it skips those - and then errors on the next ones.
this is an wpmu that was started in 2006 - and as been through several upgrades, this move from 2.9.2 to 3.0 is a struggle.
I've had my host check error logs and there seems to be no error reporting from wordpress. I'm totally lost now.