Okay having just run SP2 again on a clean SQL 2005 installation with the mdf's & ldf's moved to their respective homes.  When SP2 was upgrading the 1st named instance I saw several new files get created in the 'original' data folder.

These were distmdl.mdf & .ldf (I delete these as part of your script as they are not needed) & mssqlsystemresource1.ldf further into the upgrade process the file gets renamed to mssqlsystemresource.ldf.  Shortly after this I see the hotfix.exe error box appear.

Does this mean I just need to change in the script when the service pack runs and move the resource db after the sp upgrade?  But surely I will then have the same problem when another sp get's released?

help...