There are 2 workarounds you can use to solve this
1. In ADUC find the groups referred to in the Configure Security Groups Window and change them back to Domain Local, Once upgraded you can change them back to Global Groups
or
2. From an elevated cmd prompt, change to the ER Server installation folder (eg - C:\Program Files\Quest\Enterprise Reporter\Server) and then call the following, replacing the SQLSERVER_NAME.COM and EXISTINGDBNAME. This will upgrade the Database. The ER service should be stopped first, and then will need to be restarted manually.
DbConsole.exe /SERVER="SQLSERVER_NAME.COM" /DATABASE="EXISTINGDBNAME" /CONFIGFILE=DatabaseWizard.exe.Config /Upgrade
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