An in place upgrade is not the only migration option you have in SharePoint, you can do a database migration, which I have found to be generally the best way to go from SharePoint v2 to SharePoint v3. I thought that I’d be able to the same thing from v3 to SharePoint Foundation, however as you can see from the above screen shot the upgrade failed again.
It is interesting to note that my http://supportweb.ciaops.net.au isn’t a very complicate SharePoint site. It has a few standard Microsoft templates but nothing else really. Given that I haven’t been able to easily upgrade it worries me a bit that upgrading existing SharePoint v3 sites to SharePoint foundation is going to be more difficult that has been made out.
Back to the drawing board.