I'm still confused about what you are doing.
I'm assuming you are upgrading from 2.6.3 to 2.7. Are you running your WP from your root directory or from a "wordpress (or other named) directory" in your root?
If from the root, and you ftp all the new 2.7 files to your server and overwrite the old 2.6.3 files, you wouldn't do an install, that is for only first time use, you would do an upgrade. ../wp-admin/upgrade.php.
If you are running from a "wordpress directory" in your root, make a new folder on your computer, name it "wordpress2 (or other named)", load all the new 2.7 files into it. Then add all your WP-Content files, theme, plugins, uploads, plus your old config file and upload to server. Then switch names of the folders on the server so the newly uploaded folder in now just "wordpress (or other named)". Then go to ../wp-admin/upgrade.php. and all should be fine. I use this method so if I screw something up I can just switch folder names and be back to the previous version. Going to ../wp-admin/upgrade.php then will downgrade your database to the older version as well.