Is the new configuration  database named differently than the old
one? We've run into this before, and we now always use the default
configuration database  name no matter what and it worked fine.

I concur with another post - its just easier if you leave the config  DB to its default name.

maybe this will also help, farm  breakdowns can be fun

ive got a medium farm and heres how i break  it down/build it back

spsbackup - portal
stsadm - sites

go to the second "extended and mapped to another virtual  server" and configure virtual server settings - unmap but do NOT delete the databases
go to the primary front-end and delete portal  site - select delete databases there.
uninstall portal 2003
uninstall WSS 2.0
go to IIS manager and use the backup/restore (metabase) to the first "initial" config
go to system32/logfiles and delete STS, W3SVC2 (or whatever your admin VS was named), delete the contents of W3SVC1 (might be one file thats being written to but thats ok)
delete all contents of c:\inetpub\wwwroot\*
delete the 60 hive
delete the sharepoint  program files location

We fixed the original issue  creating a new Config database  by
changing the default SQL database for our Sharepoint account back  to
master. It had been set to the old config  database at some point.
Once that was done no problems creating a new config and the new name
didn't matter.

Now for the next issue with rebuilding a farm  - We have restored the
farm and site  has been recreated however the indexing server doesn't
want to play. Restore of the Index content for the portal  times out
or hangs up and if from Index server is in 'Initializing' state.

Any ideas  why we can't retore the indexes? I beg to differ
that 'Farm breakdowns can be fun' ;)

Are these custom content indexes, or are they the OOTB indexes
(Portal_Content; Non_Portal_Content)?

Custom..if you mean custom by altered inclusion/exclusion rules,
schedules etc.. Not custom as in additional to Portal and Non_Portal
content.

Our problem may be trying to use a Virtual server image as the
indexing server in dev...any known issues with that?

Maybe you should take a look at this article

support.microsoft.com/default.aspx

it describes how you can rename a sharepoint  server but to do this
it describes which you need to perform to rebuild your configuration.

OOB indexes. You can create other indexes to use, but the ones you mention are OOB.

I knew that - I was merely asking abates if she had created any
indexes in addition to the OOTB indexes...I had the names in
parentheses just to remind her of what those default indexes
were...sorry for the confusion!

In your Tech Ed presentation on Tearing Down and Rebuilding you
mentioned a 3 page KB about moving/changing Index Servers. We need
to swap out some overwhelmed boxes with new workhorses and would sure
like to practice the methodical I'm sure, steps a few times before
production. I've searched without any luck for the specific process.