I have several Drupal 5 Multisite installs. I was able to run "drush update -l www.example.com" on several of them successfully, but a few of the installs failed with
"The command 'drush.php update' could not be executed."
Cryptic indeed.
There is a drush patch to provide more helpful error messages (http://drupal.org/node/449090).
but in my case it was just that the Drupal Core "Update Status" module wasn't enabled on the offending sites.
