When you plan to upgrade your ILM server to another version, carefully check the supported upgrade paths on the ILM 2007 FAQ at MS: http://www.microsoft.com/windowsserver/ilm2007/faq.mspx#EJCAC
A while ago I was updating a ILM 2007 server, used for a proof-of-concept, to a test & development server.
I used the setup files to reinstall the new version on top of the old (eval) software.
Then I got this message:
I didn’t know ILM 2007 had a “developer edition”…
After a check with PSS: It doesn’t.
But it’s just a strange way to tell you that you’re not following the right upgrade path