Whilst upgrading a single server TFS 2005 to a dual server 2008 install I hit a problem. I had installed the new 2005 Data Tier (DT) and patched it without issue. However then I tried to apply the patch VS80-KB19156-v2-x86, the Quiescence GDR patch, on the Application Tier (AT) I got the 29109 error: SQL Reporting Services configuration encountered an unknown problem. A search on the web found this is a common issue usually fixed by repeated retries! This did not work for me.
After much fiddling, I started again and cleaned down both the DT and AT. This time I made one change from the process detailed in the TFS dual server installation walkthrough – I DID NOT patch the SQL 2005 instance of Reporting Services on the AT prior to installing TFS. This time the TFS patches applied OK, I then patched SQL at the end of the installation process to bring it in line with the DT SQL patch level.
This would suggest the problem is that the TFS 2005 patches are checking for something that was set in a default SQL 2005 install but not present in one that is patched to SP3.
Anyway hope my experience saves you some time.