It's actually not a database compatibility issue because the backups always restore just fine if restoring from the direct network path and not via the DFS alias. I used backups taken from SQL ...

However, when i attempt to do an in-place upgrade of SQL to 2008 R2, either 32 or 64 bit, it goes through the part where it checks the Setup Support Rules with no issues.

Moving from SQL Server 2005 to SQL Server 2008 won't be quite as monumental as upgrading from SQL Server 2000 to SQL Server 2005 (which many organizations haven't even done yet).