I've had MT since 2.4 or something, and it I've been following the instructions for upgrades.

However, it still shows my version as 1.2.

I upgraded this afternoon to 2.661 and it still says Version 1.2, both on my blog and on my menu pages.
What am I doing wrong?

It's telling me that I've already upgraded to Version 2.0.

My blog is http://www.pendasrealm.com/diner

This is a problem with a plugin - do you have the Location plugin installed?

Why yes I do. Should I uninstall it?

Fixed - thanks!