Hi Signal Group team - Thanks for asking your questions and welcome to the GeoNet community! I wanted to let you know that we're moving your question to the Managing Data space so our Esri and user subject matter experts can further help answer this and future questions. So you're aware on how and where to post your questions, here's a few quick tips and reminders:
Thanks again for contributing and I hope this helps and let us know if you have any questions.
It's always critical to specify, in the question:
The error message implies that your database is incompatible with your Desktop.
Well from the System Requirements page PostgreSQL database requirements for ArcGIS 10.4.x—System Requirements | ArcGIS Desktop , it seems that the PostGIS 2.3.2 is not supported with 10.4.x yet.
Can you try with PostGIS 2.2 and check...
That is because the PostgreSQL Enterprise Geodatabase System Table needs to be created under the SDE Schema.
Check the "Create a geodatabase" part in the above link..