I'm not sure the prerequisite check validates external (featuredataset) topology, but it does scan
for corrupt geometries (the "self-intersecting" message is not due to an optional ArcGIS topology).
The data *should* be correct to be inside the database. ArcSDE performs referential integrity
checks before accepting features for insertion into the database. If invalid features are present,
this represents a serious issue (especially with ST_GEOMETRY, SDEBINARY, or SDELOB storage),
which is why Craig urged you to contact Tech Support.
The purpose of the 'Prerequisite Check' checkbox is to avoid an undo after the actual upgrade
fails because prerequisites are not met. If you run a prerequisite check *only*, find problems,
fix them, run another, and the database is clean, *then* you can un-check the box to avoid
another long-running check before the actual upgrade starts (this is "best practice" methodology).
- V