Does that mean I have to uninstall and re-install 10.5 and upgrade to 10.7 using the patch?
Yes.
1) Go to: ADD/REM PROGS. You should have just S10 & Bonus Content DVD showing?
2) Remove S10 & leave Content DVD.
3) Download Pinnacle's RegDelete Prog & Run it 3 times for S10 only.
4) Do a Custom, rather than Typical Install of S10.5's 2 Cds & choose not to Install Instant DVD & Mediamanager/Server. Ignore request to Install Content DVD.
5) Update to S10.7 Full Patch.
6) Defragment your Hard Drive.
Hope that cures it. If it doesn't, you'll have to try something-else, but still keep S10.7 in any event.