Ok, so for future reference the new bitcoin daemon doesn't like it when you feed it old blockchain files, we were feeding it the 170K and then the 137K blockchain from here:
http://sourceforge.net/projects/bitcoin/files/Bitcoin/blockchain/The official release since our client's don't like to wait for the blockchain to download, and it always worked great, now it doesn't anymore with that new version. Once we started from scratch without a blockchain it seem's to be working great now.