SQL version error during Service Manager 2012 install/upgrade

You may encounter the error "SQL Server x is not running version SQL Server 2008 or SQL Server 2008 R2" even though the server IS running the correct version of SQL server.  Try the steps provided in this article and it should resolve the issue.
http://support.microsoft.com/default.aspx?scid=kb%3bEN-US%3b956013.  Note that your path may be a bit different than the one shown in the KB.