I had this exact same problem. Believe it or not, it actually turned out to be my sound card. I was using a Dynex 5.1 PCI sound card. I cannot remember off hand what driver that uses in Ubuntu. Taking out the sound card caused winecfg to complete normally and then I could put the sound card back in and use wine (as long as I didn't go to the sound settings in winecfg, as that would lock up the whole system again). I ended up just buying a different sound card.
