You should be able to just run the 2.1 upgrade and it will take care of everything.  You should make sure to backup the database before the upgrade just in case there is a problem.

It is usually best to install SplendidCRM on a QA machine and just copy the files to the production server.  Our installation program does not, and simply cannot, account for all possible production environments.

As for configuring the web site to point to separate databases, the trick is to specify Registry as the SplendidProvider in the Web.config file:

 <appSettings>
  <add key="SplendidProvider" value="Registry" />
 </appSettings>

In the registry, we use the domain name to lookup the database connection.  The following text can be customized, saved as a .REG file then run on you web server to create the required entries:

Windows Registry Editor Version 5.00

[HKEY_LOCAL_MACHINE\SOFTWARE\SplendidCRM Software]

[HKEY_LOCAL_MACHINE\SOFTWARE\SplendidCRM Software\demo1.splendidcrm.com]
"SplendidProvider"="System.Data.SqlClient"
"ConnectionString"="data source=(local)\SplendidCRM;initial catalog=SplendidCRM_DEMO1;persist security info=True;packet size=4096;user id=sa;password=splendidcrm2005"

[HKEY_LOCAL_MACHINE\SOFTWARE\SplendidCRM Software\demo2.splendidcrm.com]
"SplendidProvider"="System.Data.SqlClient"
"ConnectionString"="data source=(local)\SplendidCRM;initial catalog=SplendidCRM_DEMO2;persist security info=True;packet size=4096;user id=sa;password=splendidcrm2005"

[HKEY_LOCAL_MACHINE\SOFTWARE\SplendidCRM Software\demo3.splendidcrm.com]
"SplendidProvider"="System.Data.SqlClient"
"ConnectionString"="data source=(local)\SplendidCRM;initial catalog=SplendidCRM_DEMO3;persist security info=True;packet size=4096;user id=sa;password=splendidcrm2005"

Once the registry is setup, you can run the SplendidCRM Configuration Wizard to update each database.  However, if you have the SQL source code, your best bet is to use SQL Studio to update each database using the Build.sql file.