Error when upgrading geodatabase

[IanBroad2]

We are using the multiple database model with SQL Server 2008, and recently installed the optimization patch for 10.2.1 on our desktops and server. In ArcCatalog, when I go to the properties of the SDE geodatabase (holding the system tables), it shows the database as already being upgraded.

But, when I go to our geodatabase that holds our spatial data, it says the database can be upgraded.

However, when I try to upgrade it, I receive an error:

Any idea what this error means?

Thanks for any insight.