Another alternative is to patch the old installer to know about
upgrading before you upgrade it.  This requires a bootstrapper to
apply the patch to the old version before you upgrade it, but its
something that I've done before to patch deficiencies in the old
version that interfered with the upgrade.

Also, a better way to handle login credentials of services is to
create the credentials explicitly.  This way you don't need to prompt
the user for credentials (and this is generally a bad idea anyway) and
you're sure that the credentials you're using have exactly the
privileges and permissions that your service needs and no more.  You
create the credentials so that people can't interactively login to it
to further protect the system.

Of the many problems that come from prompting for credentials are that
when people quit companies, their credentials get deleted too, but the
installed product is supposed to keep working.  Oops.  Basically
prompting for credentials just introduces another uncontrolled
dependency on your product and its better to control that dependency
(and the security of the credentials) by creating the account
yourself.  Create a local account.  If you have different sets of
credentials needed by different services, create multiple local
accounts and create a local group to which you add them.  Domain
administrators can control trust by adding the local account or group
to domain groups.
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