Okay, it's all working again...YAY!
I used the installation video tutorial for installing (the pdf file seemed too complicated and overwhelming to me) and it was great but left out a few important things for DNN4. Here's some things I learned in case it might help someone else.
This all applies to your local machine server with DNN4 and ASP Net 2.0:
1) When installing SQL Server, make sure that you have the "default" name checked when you begin. It kept sticking /SQLServerExpress in there and it would put that after the name of my local machine. Even though I could log in to it, and even though I had the database and login set up correctly, when I tried to install, DNN couldn't find it. This gives you the DNN Upgrade Error, can't access the database type message.
2) Make sure you don't make typos when entering stuff. At one point I had typed in DotNetNike and it messed everything up!
3) Make sure you are installing DNN4 if you have ASP Net 2.0.
4) The video doesn't tell you that you have to rename the file "release.config" to "web.config" I had alot of trouble figuring that one out.
5) The line that the video tells you to edit in the video is actually commented out in the web.config file. You have to uncomment it, comment out the one before it. Also, the video doesn't tell you to do the edit in the section right after the one the video shows. The same problem with the commenting annotations has to be corrected in the second section. If you don't get this fixed, you get the error message about not finding the .mdf file.
6) The video doesn't tell you that if you don't have SQL Server that you can download it from the MSN website. It also doesn't tell you that you need to download the SQL Server Express Management Express also (both are free.) When you go to MSN to download, the instructions warn you that you need some extra file besides the two mentioned here. In fact, the file it is referring to is already included with the application you downloaded in the first place.
7) The video is a little confusing when it tells you what to type in when referring to your local machine name. If you are using it for permissions in the DotNetNuke folder, just type in ASPNet and click "Check names" and it will put the correct name in there for you. If you are trying to enter it into the web.config file (video shows the guy typing something in there next to Server=) you don't have to actually enter anything there, just leave the default Server=(local).
While searching for answers in my many install problems I noticed I'm definitely not the only one. Hope this helps someone else out who is strugging with the same problems I had.
~B