upgrading worked great. I changed from version 2 to 2.7 and had a custom theme, changes inside the Core dll, web.config file and other files.
I used the instructions from here http://blogengine.codeplex.com/wikipage?title=Upgrading%20to%20BlogEngine.NET%202.7 and had no issues. I did the changes and upgrade in my DEV environment first and checked it... then I copied it to my own server (no GoDaddy
But be aware (or maybe I just understood you wrong...):
"In the instructions it says to save only four of the files from the previous versions… I've also changed some of the settings and a few other things."
-> You need to save your App_Data folder from the previous version and only 4 files from the new (!) version of the App_Data folder.
Regarding changes to other files:
I marked all my changes with a custom tag and searched for the tag so I don't miss one of my changes. Then I just upgraded using the instructions. Then I took my custom changes and checked first if it was already implemented in the new version. If no I recreated
the changes in the new version.
-> So I don't recommend to copy files from the old version to the new version except the mentioned App_Data stuff. If you have extensions / custom I would manually recreate them inside the new version if you still need it.