Can I switch from MSDE to SQL Server 2005?

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Yes. If you are experiencing problems with the limitations of managing your database on MSDE, you should upgrade to SQL Server 2005.

Please refer to the following KB article: Upgrading from MSDE to SQL Server 2005/2008

For reference, Microsoft also has an excellent article describing how to do it: http://www.microsoft.com/technet/prodtechnol/sql/2005/msde2sqlexpress.mspx