The Indigo 7 upgrade works just like the Indigo 6, 5, 4 upgrades before it. It will copy everything from the Indigo 6 installation directory into the Indigo 7 directory and start up from there. It will leave the previous installation installed and functioning in case something doesn't go right.
We've had over a thousand upgrades so far and only one other upgrade had a problem (the user didn't store his database in the default location so there was some initial confusion about that). Other than that, I believe it's been quite smooth. I have no idea what went wrong with your installation.
I'd recommend restoring your Indigo 6 installation from a backup (you do have a backup, right?), make sure that it's running correctly, then rerun the Indigo 7 installer and watch for any issues - follow
the upgrade instructions in the documentation. When you start Indigo 7 up, watch the Event Log for any errors or messages indicating there might be an issue.