I just installed SQL Server 2008 R2. It was not as hard as I thought it might be. I already had SQL Server 2008 installed, so I was facing the choice of uninstalling SQL Server 2008 before installing the new version, or installing SQL Server 2008 R2 side-by-side, or upgrading SQL Server 2008 to SQL Server 2008 R2. It was a little hard trying to figure out which was the best option.
To manage the versions with side-by-side installation, SQL Server 2008 R2 side-by-side installation with previous versions is supported until SQL Server 2000, if you have SQL server 7 on the same machine you have to upgrade it to minimum level of 2000 compatibility. SQL Server supports multiple instances of the Database Engine, Analysis Services, and Reporting Services on the same computer. You can also upgrade earlier versions of SQL Server, or install SQL Server on a computer where earlier SQL Server versions are already installed. By design if the previous version of SQL Server is a default instance then you have to install 2008 R2 as a named instance, as you cannot have more than 1 default instances per server.
For me, I did not want to maintain multiple versions, so I decided to use the upgrade option. Suprisingly, the installation was relatively smooth. With the upgrade option I was not able to change any of the features that were selected for the previous version. When I go to the "Setup Support Rules Check" step, I was surprised to see that one task failed. This is the step where the rule engine checks that software pre-requisite are satisfied before starting to copy files. By having a failure, the wizard would not let me continue! When I clicked on the "failed" linked, it told me that "The SQL Server 2005 Express Tools are installed. To continue, remove the SQL Server 2005 Express Tools." So I went to the Add/Remove Programs and I could not find anything related to SQL Server 2005. I said, "What do I do?," "How can I complete the installation?," "Why did the wizard wait till half way through the installation to tell me that this was an issue?, Why didn't the wizard identify this issue in the pre-installation step?"
Luckily, the solution was relatively simple. I had to go into the registry (regedit.exe) and remove the folder at: HKLM\SOFTWARE\Microsoft\Microsoft SQL Server\90. It is my understanding that if I had a 64-bit machine I would find that folder at HKLM\Software\Wow6432Node\Microsoft\Microsoft SQL Server\90.
After that, the installation completed successfully and everything has been working perfectly since then.