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This is a known issue for SQL Server 2000. See the 'SQL Backup extended stored procedure library' section in this document for details and workarounds.
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'Server Component Installallation - Failed'
'The SQL Backup extended stored procedure DLL version is 5.1.0.2781, and 5.3.0.178 was expected.'
The account I log in with to perform the upgrade is the same as the service account that SQL Backup runs with.
Server is running Windows 2003, SQL Server 2000.