And it was pointing to the custom settings….we doubled checked and confirmed that the custom setting had the default values. Also, it was accessible to anyone (public).After some time I realized that the test method API version was 24.0.. I changed it to 23.0 and there were no errors 🙂
Edit – SFDC has introduced test classes not to access data directly with API 24. Even though it is a good move , I would like to access certain info by default like custom settings, and Pricebook. But there is always an option to use @istest(seealldata=true) to access live data.