Hi Paul,
Apologies for the lack of response, things will continue to be busy for me this week.
To check the database schema version, execute the following SQL and let me know the highest version reported: "SELECT * FROM Version"
The check your assembly version, get the bin/DotNetNuke.dll onto a windows machine, right click, select "Properties", select the "Details" tab, and report the file version.
I suspect a mismatch, and a mismatch can be a dangerous place to recover from. There should be no issue with using MSSQL 2008 (many, including myself, have done the 2005 -> 2008 dance).
You can contact me at bhaynes [at] fas.harvard dot edu if you'd like some more hands-on assistance (though my schedule will not allow too much of this).
Brandon