I've got a DPM 2007 server with 4TB storage... and since it's DPM there are many, many volumes on the disks when you view disk manager.
I've copied over an ISO of Server 2008 R2 and run an upgrade install. When the server reboots the screen shows "Upgrading Windows..." and stays there for a long time. I left it for 16 hours. Then I rebooted it and it happily booted back into Storage Server 2003.
I remember that when I did an inplace upgrade of a Vista laptop to Win7 it "processed" disk 2 even though the OS was on disk 1. Although in that case user data was redirected to disk 2.
Plus this isn't (I don't think) a supported upgrade path - although the setup didn't complain.
So hivemind... Am I being impatient or am I trying an upgrade doomed to fail?