This has been my main objection to brain inside of a computer thinking. If we could simulate the universe inside of a computer we could do all kinds of neat things, such as drug development in a computer, but it isn't algorithmically possible. The Kurzweillians are just assuming that we'll wave the magic wand and have efficient algorithms for everything such that computer simulation of reality will be trivial. If you have an exponential complexity algorithm that is in the middle of your problem like protein folding for example it will NEVER be practical to simulate in a computer on any non-trivial problem.
I don't want to rule out better algorithms developing very good approximations for what currently appear to be daunting problems like protein folding. But there are a lot of problems like folding out there where even a century of Moore's Law marching on wouldn't be enough to solve large instances with today's algorithms. And Moore's Law looks like it's going to do more shuffling forward than marching forward in the future.
So basically I agree with you: there's no generic march-of-progress that assures a world of Kurzweillian wonders. I want to see more concrete evidence of progress in relevant areas before I start entertaining life after the Singularity. (I expect a future profoundly shaped by many "narrow" AIs rather than AGI precisely because there has been so much concrete progress with the former compared to the latter.)
