vCenter 4.0u2 upgrade to u3

I was in the process of upgrading vCenter 4.0 update 2, to 4.0 update 3 and it failed during the SQL Server step.  The error message I received was, SQL Server Setup was unable to add NT AUTHORITY\SYSTEM to local group DOMAIN\SQLServer2005MSSQLUser$SERVER NAME$SQLEXP_VIM.  This happens to be error 1388.

Upon doing some research, I found this Symantec article which describes exactly what I'm running into.  Our vCenter server used to be a domain controller but when it was upgraded to either 3.5 or 4 (I don't remember which version), it had to be demoted due to vmware's requirements.

The link recomends doing a backup of the databases, uninstall SQL Server, reinstall SQL Server and then migrate the databases into the new instance of SQL Server.  Has anyone run into this issue before?  I realize most people have migrated to 4.1 but our company isn't looking to provide the funds to do that, so I'm trying to keep up to date with 4.0.  Also, has the database structure changed from update 2 to update 3?  If I were to try to migrate the old data into the new empty databases, they would have to have the same structure.  Let me know your thoughts.

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