I quit a job 2 years ago and left my 401k and didn't touch it.  Now I
am trying to get my money out of the 401k, but my previous employer is
holding me up because they say I owe them money for a payroll advance
from when I was employed with them.  The trustee of the 401k which is
the owner of the company has stated that they will not release my
money until I pay off the payroll advance.

Do they have a an iou or promissary note?  Even if they did, and were
completely in the right, they should still release the balance of your
money.

http://html.click2houston.com/sh/money/askanexpert/money-askanexpert-20000406-163451.html
this person advises to contact the investment company.

Your boss needs to receive a very stern, but non-threatening and
professional letter that lets him/her know that there are severe
consequences to their actions.  This reply from about.com uses the
word "threat," but in your letter I might suggest the wording, "I will
be forced to..."

http://experts.about.com/q/931/1655951.htm

"Send a certified letter, return receipt requested, demanding a
release of the money, with a threat to complain to the Dept. of Labor
if the money is not released within 30 days. Make arrangements with a
broker or bank to transfer the money out. They should have the forms
necessary for a custodian to custodian transfer, and they should be
able to coordinate the move. If the money's not released, you can
complain to the Dept of Labor in D.C. as this might be an ERISA
violation."