I just encountered the same problem. I don't get to TMG on a regular basis, but do several weeks of marathon sessions about twice a year, during the dog days of summer and again in January/February. So when I went to TMG this morning to start my summer session, I let it update to 8.08, and lost everything. I downloaded the trial version and got it going again, but when I tried to open my main project, it told me that it has to update the project to the latest level, just like when I initially installed TMG 8.0 last year. Thinking that it must have been going to an old, pre-8 database, I refused the update (cancelled). It then set up my normal environment and opened my main database as usual, without any additional action on my part, and without conversion.
My concern is that I may be using an older database, so I produced a report on last edit date, and found that it was in January. I believe that I have added some updates to the database since then, but can't be sure. I back up nightly, but also swap my backup drives to an offsite location, about 30 miles away, about once every 60 days, and my last swap was done in early June, which means my offsite copy would contain any TMG updates/edits from about early April through early June. I really don't have the time or ambition to pick up the offsite copy today, and hesitate to update the database until I know for sure.
So what's going on with this effort by 8.08 to update my database? I cannot find another database on my desktop with a .PJC extension, and keep my TMG databases in a data location of my own choosing along with all my other important data (I've always refused to let Microsoft (currently Windows 7) control where my data is kept, since it is often difficult to find, buried under many folders and pseudo folders, when using their approach). Did TMJ 8.08 default to some other folder and perhaps a new file type for the database?
I had a problem of a similar nature, fixed late last year with help from the kind members of this group. See the thread 'TMG V8 opens with "The file **** does not appear to be a valid PJC file!"'in this forum. Just a few minutes ago I restored the last backp of the PJC file for this project (updated in March), with no change in this behavior.
I'm not proceeding with any more updates until I understand this problem, so please post your suggestions as quickly as possible.
Thanks, Dave Dalton