The sticking point (along with the money), seems to be that Alonso just wants a one year contract so he can shift to a more competitive team in 2009 (maybe Ferarri), but none of the possible teams are interested in being a short term holding pattern for Alonso - they all have longer term plans.
Also a lot of teams now see Alonso as not a team player, and don't want to touch him for fear he'll become a divisive force. He didn't do himself any favours isolating himself at Mclaren, and making so many public statements against them.