Looks like the schema has changed for V3 Validation block config file (e.g. no "defaultRule" or Rule tag). Can you please provide the new schema? There is nothing in the documentation.
The best way to determine any changes to the schema in the configuration file is to use the GUI configuration tool to create a sample config file. It should always provide valid output to the configuration file.
After create a test config file using the GUI Tool, this is the way to specify a default rule set for the Validation Application Block in the January 2007 CTP:
<type defaultRuleset="Rule Set" ...>
<ruleset name="Rule Set">
I hope that helps.
Microsoft MVP C#