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I've tried upgrading to 1.6.5 and I'm receiving the below error on the second step of the upgrade. Anyone know why I'm receiving this error?

string(123) "Smarty error: [in upgradeheader.tpl line 25]: syntax error: unrecognized tag 'assign' (Smarty_Compiler.class.php, line 590)"

string(117) "Smarty error: [in upgrade1.tpl line 16]: syntax error: unrecognized tag 'cycle' (Smarty_Compiler.class.php, line 590)"

More info about your set up is needed but first make sure all files have been uploaded and overwritten properly.

The upgrade was from 1.0.4 to 1.6.5. Should I try upgrading progressively from 1.04 to like 1.1 and continue up to 1.6.5? Perhaps it was too much of leap.

Also, should I disable all modules before an upgrade?

Probably safer on all counts, upgrade in steps and check site after each and yes for non-core modules

Did you try to resend the files to ensure they all uploaded properly?