I double checked to make sure I had that Y line in my ircd's conf it is, pasted right from the readme.
here is the entire log from anope
[Mar 05 15:41:42 2006] Loading IRCD Protocol Module: [ultimate3]
[Mar 05 15:41:42 2006] status:
[Mar 05 15:41:42 2006] Launching Anope into the background
[Mar 05 15:41:42 2006] Anope 1.7.13 (951) (ircd protocol: UltimateIRCd 3.0.0.a26+) starting up
[Mar 05 15:42:08 2006] Databases loaded
[Mar 05 15:42:08 2006] Info: Reflecting database records.
[Mar 05 15:42:09 2006] FATAL: Can't connect to server: No such file or directory