I just performed the upgrade from 4.1.2 to 4.2 on win2000 and it worked
fine.  It should leave the server1 directory in place as that is the
instance of the server and the install will detect that the instance is
already there and do the conversion of the data to the 4.2 version.  You
should not have to perform the initial configuration wizards (except for the
license one) unless you want to start a new server instance.  Starting
server1 instance should put you into the same database that you were using
prior to the upgrade minus the licenses.  Run the license wizard to entire
your correct number of license for all pieces.