PEM 7.3 - upgrade issues

We are trying to upgrade our instance of PEM to 7.3.  We have already completed the upgrade of Email Security to 7.3

At the beginning of the install, we get the following errors:

"Error: invalid connection.  ConnectionOpen (Invalid Instance)"

I hit OK on that error and get the next error.

"PEM database does not meet minimum requirements"

PEM database is currently residing on a SQL Server 2005 instance.

Any ideas on this?