I am setting up a test server for testing the 7/5/2010 update.
 
I have installed Pervasive Workgroup v10 on our test server.  I provisioned the DB engine to use the data directory c:\DBAMFG; Stopped the DB engine; copied the DBAMFG files from the production area; restarted the DB engine...DBAMFG was not listed as a database in Pervasive.
 
While installing the EVO update I received the following message during the "Update" phase - Initialize: BKPSUSER.B00:
  "The file you have tried to create already exists..  If you 'CREATE'
  it again you will delete all the existing data beyond recovery.  Do
  you wish to continue? (Y/N) Y"
 
I also received this same message on one other file.  I did not note which file.
 
This message is not covered in the forums or the update instructions.  I think the correct response is "Cancel", however please advise as to the correct response.