This seems to be a PHP5 problem. The same thing happened to me running PHP 5.0.1 with moodles 1.3.4 and latest 1.3. Dropping down to PHP 4.3.8 after installation does not help because the table was not initialized correctly (block management says 'no blocks'). You must drop down to 4.X AND reinstall in order to initialize it correctly.
(BTW, I went back up to PHP 5.0.1 and tried latest 1.4, and it worked correctly, so apparently the PHP5 stuff is working.)