Upgrading from SQL 2008R2 Express

I doubt you can do that with Express at all. But if, an in-place upgrade replaces the existing instance completely. However, you can always decide to keep the compatibility level of each single DB at 2008r2. In fact, you need to manually change that compatibility level to something higher for existing DBs.
The compatibility level does not change the meta data. That is, a DB attached to MSSQL cannot be detached or backed up and attached/restored to 2008r2 or anything prior to itself.

I would upgrade all DB's if there was a way that I didnt need to purchase CAL's for the users accessing the other 2 DB's.

Won't you need to purchase CALs for the rest of the databases too?

I will for the one DB as I am forced to upgrade as we have reached the limit of what SQL express can offer us... But the other 2 DB's are only scratching the surface of SQL express.

The CALs are by SQL Server instance and not by database. So if you're already paying then you can have all databases in the same instance. Just be sure that the number of CALs are enough and you should be good to go.

I purchased SQL standard 2012 SP3 - installed it no problem....   I detached DB's from 2008 Express and when I try to attach to new 2012 instance I get the follow error.. please see attached.

error.docx

I cant find that service account in ADUC in order to add to folder permissions...  when I installed the new copy of SQL during the setup process I gave the SA account a different password...  I now have 2 - sa accounts for the 2 sql instances.

are you able to step me thru?? sorry