What error did you get exactly?
Was it really an error or just a warning. If I remember right, you get a warning if you have less than 1 Gb of RAM, but that doesn't mean that you cannot continue installing.
Also you cannot really upgrade from MSDE to Workgroup Edition 2005. I would suggest to detach or backup your databases , then uninstall MSDE , install Workgroup edition and then attach the databases again.
[font="Verdana"]Markus Bohse[/font]