That is saying that if any database is Read-only, Suspect, or Standby then you will get the message. You have checked your databases and say this is not so.
Did you restart the m/c before trying to load the service pack?
Are you sure that you are using sa for the upgrade?
Try logging on using the sa password you gave and creating a table in each of the databases to check that they are updatable.
Model is a database that could have problems and you wouldn't notice.
I'm sorry GraphicW, I think you may be in the wrong forum. This MS SQL Server not MySQL.
You know when I see comments like that I always remember this car ad on TV. The one were this car manufacture compares itself to BMW and Mercedes, saying it has all the features and performance but for a lot cheaper. However have you ever noticed how BMW and Mercedes never compare themselves with other cars or mention other manufactures? When you deliver the best you don't compare with subquality cars.