I can able to reply to this error because i faced this situation. I installed SQLServer 2008 on one server. After some time I tried to open the management studio from the server and encountered the below error.
In some articles postes that it is by design,
The issue is due to database state and log file location being unavailable during upgrade, once the drives are visible to the server it started up correctly.
All we need to do is just wait few minutes and let the upgrade complete its process. After that it allow us to connect.