Keep in mind that there are three parts to the ArcSDE technology -- the client application, the
application server DLLs (which may deployed in two ways), and the database instance.
When you upgrade the application server binary, it does not automatically reconfigure the
database -- You must also do this (as the SDE user with the required permissions).
In previous releases, the ArcGIS geodatabase upgrade was a part of the 'sdesetup -o upgrade'
command, but since 10.0 was released, an ArcCatalog host (or the Python equivalent thereof)
must execute the database upgrade (the only exception is if the instance is effectively empty,
with no tables registered with the geodatabase).
The only way the application server daemon will start is if the database instance has been
successfully upgraded from a compatible Catalog (or Python). Make sure you have a stable
backup of the database instance, since if the upgrade fails in unexpected fashion, the Catalog
GUI may not offer you the option to upgrade (I had this happen when my VPN session terminated
before CArcCatalog finished -- Not pretty).
- V