yes,
I will call the dbo 'nigel' - this name is listed in the connection string:

e.g.
<add name="sqldataprovider" type="DotNetNUke.Data.sqlD....... ObjectQualifier="" databaseowner="nigel" />

<connectionStrings>
       <add name="siteSqlServer"  connectionString="Data source=xxx.xxx.xx.xx; Initial Catalog=MyServer; User ID =nigel;.... />"
</connectionStrings>

       <appSettings>
                  <add key="SiteSqlServer" connectionString="Data source=xxx.xxx.xx.xx; Initial Catalog=MyServer; User ID =nigel;.... />"
        ......
        </appSettings>


here is an example of my settings:

SQL2005 settings:
I will call our database: dbTest
User trying to connect to dbTest - I will call 'nigel'.

Secuity >> Logins >> nigel >> Properties:
General: login name = nigel
Default database = dbTest (not sure if this matters)
Server Roles = public is checked (although I have tried checkng everything)
User Mapping = dbTest is checked.     user for this = nigel.     default schema = nigel
Database Role Membership = db_owner and public are checked.
Status = Grant & enabled are checked.

dbTest >> Security >> users >> nigel >> Properties:
user name = nigel
default schema = nigel (not sure f this matters?)
Owned schemas: db_owner & nigel are checked
database role membership: db_owner is checked (uner role members)

Securable: got lots of aspnet stuff listed under Name (e.g. aspnet_AnyDataInTables, aspnet_checkSchemaVersion, aspnet_MembershipChangePassword etc - Type = Stored procedure,
Explicit permissions for all these - all have execute checked under the grant column)

Notes;
* We used to have 3 dnn sites - all use the same connection (nigel as the dbo and nigel as the user and same pwd etc) and all used to work ok .

* We recently made some changes - just moved the mdf and log files and back up files to a new location.

*After the above folder change - we had to create new user accounts with a new login in order to get all sites working again.

thanks, I tried changing default schema to 'dbo' but didn't work.

When I run the upgrade using dbo as default schema and dbo as the database owner (in web.config) I get this error:

         Upgrade Error: could not connect to the database specified in the connectionString for sqlDataProvider.

When I change the database owner (in web.config) back to 'nigel'
the upgrade runs, but with the same permission errors as mentioned earlier.

Prior to the upgrade; If I change the database owner (in web.config) to 'dbo' I get an error: 'Site Unavailable'

Prior to the upgrade; If I change the database owner (in web.config) back to 'nigel' the site runs.

However, the site only runs when creating a new login name (and obviously amend web.config connectionString accordingly) 
I am going to call the new user here: 'user_new'.

When I run the upgrade as the new user ('user_new') - it fails and gives this error message:
        The stored procedure 'user_new'.UpdateDatabaseVersionAndName' doesn't exist.

So basically,
 it looks like there was a problem with our original user 'nigel' and this has resulted in us creating a new user, but I can't transfer all the ownership rights over from 'nigel' to the new user.

Thanks for you help Bill.

In sql2005 under my database >> security >> users >> nigel >> I have selected dbo as the default schema...

this, initially resulted in another error saying:
Login name must be specified

Having looked this up, it seemed to be down to an orphaned user.

so i ran the following script:
EXEC sp_change_users_login 'Report'
which listed 'nigel' and its SID

I then ran this script to fix
exec sp_change_users_login'Update_One','dbusername','dbusername'

Eventually it worked and I changed the default schema to 'dbo'.
I also had under user mappings:
User Mapping = dbTest is checked.     user for this = nigel.     default schema = dbo

I could now access the site using 'nigel',

I ran the upgrade again.....

But still got the same errors, although this time, my site is still mostly functional! (except for some issues with some templates on the repository, which i may be able to fix)
Before, all the modules were corrupt after the upgrade.
So I'm not sure if it's worth pursuing the errors, as everything appears to be working so far.