If you get the error "the virtual server that is referenced here is not in the config database" when you try to use object model, and if the microsoft KB article didn't solve it for you, and you are totaly puzzled...you may have the same problem I have - lack of attention.
This error appeared on my screen because I was developing on a server that has both sharepoint 2003 and sharepoint 2007, and in my project I referanced (without noticing) the DLL for WSS2 and not WSS3.
So ofcourse the code would throw an error it can't find the virtual server in the configuration database! it was looking in the wrong configuration database!
HA!, what a silly person I am...wasted half a day trying to troubleshoot this - going into the database, rebuilding the sites, rebuilding the application, extending the sites, mucking with IIS...untill I noticed the path to the DLL has "60" in it.