If it is telling you that you cannot upgrade, then I must assume you cannot. Stating what version of Win 7 you are upgrading to might help, but if you are going to Pro, ther is a disconnect from some of the prior versions.
Microsoft says you can use the Easy Transfer Wizard to save much of your data, but it will not allow you to reinstall the programs, you will have to do that yourself. If you do use Easy Transfer Wizard, make sure you check what files it is backing up, since it will include the files on an External Drive you use to backup to.
After you have backed up all your data, by either Vista backup and restore or Easy Transfer Wizard, you can boot to the DVD and do a Custom (clean) install.
Once again, you will have to reinstall your programs. A clean install might take more effort initially, but might save you headaches later.