Lou- It looks like the update for international support includes conversion of all files to ANSI (character set) codepage 1252 format. In the process, temporary files of the new database are created. After the programs considers the conversion complete, it copies the new files over the old. UFTree.exe contains a warning to the effect that this can take a long time with a large database and/or a slow computer.
If you interrupted this process somewhere in the middle, you may have created some corrupted temporary files, and may indeed need a new beginning of some sort. This may include deleting the temporary files. But the final effort should be worth the trouble, because you probably need the patches incorporated in the latest UFT versions to operate the program on a fast computer anyway.
I would also suggest again that you re-check you project name in ROOTS V before you start, and make sure that it contains no numbers (letters only). Rename the project if necessary before updating to UFT 2.x or 3.0. The program should automatically do this for you, but there might be some glitch coming from Roots V.