Ok so I tried to do a fresh install of pulse on the server. The install went fine. The problem comes when I change the password. After changing the password I cannot log in again!!! This is really a very huge problem and I might have wrecked the site, which consist of many years work of my client. What is going wrong with this version, and what am I going to do now?
So after much agony I have Pulse up and running again. It seems that when it makes the install, when the install is in a subfolder, it detects that the install is in a subfolder, but it leaves the path empty instead of putting the name of the subfolder in the install. By manually choosing the folder when the install begins, it kind of stops the install and it goes to the finished install mode. Then one can login and change the password. I did not dare to change the user name of the administrator. By the way, the install now claims that the first login is being done with "administrator" instead of "admin". But anyway I am able to login with this username "administrator" and my chosen password. I then took the content folder i previously packed up and uploaded it, and now the whole site is up and running... phew... My Goodness...
Wow.. How terrifying.
Never underestimate the need to have a complete account backup before upgrading.