The config.xml:
<?xml version='1.0' encoding='UTF-8'?>
<hudson>
<version>1.413</version>
<numExecutors>2</numExecutors>
<mode>NORMAL</mode>
<useSecurity>true</useSecurity>
<authorizationStrategy class="hudson.security.ProjectMatrixAuthorizationStrategy" /> <!-- This is the offending line. -->
<securityRealm class="hudson.security.HudsonPrivateSecurityRealm">
<disableSignup>false</disableSignup>
</securityRealm>
<markupFormatter class="hudson.markup.RawHtmlMarkupFormatter"/>
[...snip...]

The backtrace on startup:
org.jvnet.hudson.reactor.ReactorException: hudson.util.IOException2: Unable to read /var/lib/jenkins/config.xml
at org.jvnet.hudson.reactor.Reactor.execute(Reactor.java:246)
at hudson.model.Hudson.executeReactor(Hudson.java:753)
at hudson.model.Hudson.<init>(Hudson.java:667)
at hudson.model.Hudson.<init>(Hudson.java:607)
at hudson.WebAppMain$2.run(WebAppMain.java:215)
Caused by: hudson.util.IOException2: Unable to read /var/lib/jenkins/config.xml
at hudson.XmlFile.unmarshal(XmlFile.java:152)
at hudson.model.Hudson$12.run(Hudson.java:2340)
at org.jvnet.hudson.reactor.TaskGraphBuilder$TaskImpl.run(TaskGraphBuilder.java:146)
at org.jvnet.hudson.reactor.Reactor.runTask(Reactor.java:259)
at hudson.model.Hudson$4.runTask(Hudson.java:735)
at org.jvnet.hudson.reactor.Reactor$2.run(Reactor.java:187)
at org.jvnet.hudson.reactor.Reactor$Node.run(Reactor.java:94)
at java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1110)
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:603)
at java.lang.Thread.run(Thread.java:636)
Caused by: com.thoughtworks.xstream.converters.ConversionException: only START_TAG can have attributes END_TAG seen ...tegy class="hudson.security.ProjectMatrixAuthorizationStrategy" />... @7:87 : only START_TAG can have attributes END_TAG seen ...tegy class="hudson.security.ProjectMatrixAuthorizationStrategy" />... @7:87
---- Debugging information ----
message : only START_TAG can have attributes END_TAG seen ...tegy class="hudson.security.ProjectMatrixAuthorizationStrategy" />... @7:87
cause-exception : java.lang.IndexOutOfBoundsException
cause-message : only START_TAG can have attributes END_TAG seen ...tegy class="hudson.security.ProjectMatrixAuthorizationStrategy" />... @7:87
class : hudson.model.Hudson
required-type : hudson.security.ProjectMatrixAuthorizationStrategy
path : /hudson/authorizationStrategy
line number : 7
-------------------------------
at com.thoughtworks.xstream.core.TreeUnmarshaller.convert(TreeUnmarshaller.java:89)
at com.thoughtworks.xstream.core.AbstractReferenceUnmarshaller.convert(AbstractReferenceUnmarshaller.java:63)
at com.thoughtworks.xstream.core.TreeUnmarshaller.convertAnother(TreeUnmarshaller.java:76)
at com.thoughtworks.xstream.core.TreeUnmarshaller.convertAnother(TreeUnmarshaller.java:60)
at hudson.util.RobustReflectionConverter.unmarshalField(RobustReflectionConverter.java:290)
at hudson.util.RobustReflectionConverter.doUnmarshal(RobustReflectionConverter.java:233)
at hudson.util.RobustReflectionConverter.unmarshal(RobustReflectionConverter.java:180)
at com.thoughtworks.xstream.core.TreeUnmarshaller.convert(TreeUnmarshaller.java:82)
at com.thoughtworks.xstream.core.AbstractReferenceUnmarshaller.convert(AbstractReferenceUnmarshaller.java:63)
at com.thoughtworks.xstream.core.TreeUnmarshaller.convertAnother(TreeUnmarshaller.java:76)
at com.thoughtworks.xstream.core.TreeUnmarshaller.convertAnother(TreeUnmarshaller.java:60)
at com.thoughtworks.xstream.core.TreeUnmarshaller.start(TreeUnmarshaller.java:137)
at com.thoughtworks.xstream.core.AbstractTreeMarshallingStrategy.unmarshal(AbstractTreeMarshallingStrategy.java:33)
at com.thoughtworks.xstream.XStream.unmarshal(XStream.java:926)
at hudson.util.XStream2.unmarshal(XStream2.java:80)
at com.thoughtworks.xstream.XStream.unmarshal(XStream.java:912)
at hudson.XmlFile.unmarshal(XmlFile.java:148)
... 9 more
Caused by: java.lang.IndexOutOfBoundsException: only START_TAG can have attributes END_TAG seen ...tegy class="hudson.security.ProjectMatrixAuthorizationStrategy" />... @7:87
at org.xmlpull.mxp1.MXParser.getAttributeValue(MXParser.java:927)
at com.thoughtworks.xstream.io.xml.XppReader.getAttribute(XppReader.java:93)
at com.thoughtworks.xstream.io.ReaderWrapper.getAttribute(ReaderWrapper.java:56)
at hudson.util.RobustReflectionConverter.instantiateNewInstance(RobustReflectionConverter.java:324)
at hudson.util.RobustReflectionConverter.unmarshal(RobustReflectionConverter.java:179)
at hudson.security.ProjectMatrixAuthorizationStrategy$ConverterImpl.unmarshal(ProjectMatrixAuthorizationStrategy.java:119)
at hudson.util.XStream2$AssociatedConverterImpl.unmarshal(XStream2.java:224)
at com.thoughtworks.xstream.core.TreeUnmarshaller.convert(TreeUnmarshaller.java:82)
... 25 more