This type of installation is known as a migration, and not an upgrade. ArcaOS 5.0.x cannot be installed in this way.
The recommended way of installing ArcaOS to ultimately replace an existing eCS or Warp 4 installation is to install it to a new partition and then reinstall applications and move data as necessary, building an entirely new working environment.
A migration feature is planned for the ArcaOS 5.1 release cycle.
For more information concerning updates, upgrades, and migrations, see this wiki page.
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