It seems hard to upgrade and I was getting can not copy error. So, it seems is more of permission, but my site dirs are all 755 and files are 644. However, its a local server (localhost) and owner of the files is under my account on my server.

anyway, to fix it, i chmod all files and directtories to 777, then i fired up the installation. Surely, it worked and upgraded my v2.5.1 to 2.5.4. Then, i put back all the dir to 755 and files back to 644.

Things I found out after installation:
The com_banners, com_installer, com_config in the administrator will not work. They all showed blank screen. To fix this, I overwrote the files with my original core joomla 1.7 and surely it worked again. But, I wonder if K2 made any changes into those core files. If I overwrote them and its joomla's core files.

Also, on the backend, if I hit Components>Contacts, I get a 500 Error, JHtmlBatch: :user not supported.. What could this be? I searched around and there was an entry on joomlacode>projects about this which already built in the code.
// Include the component HTML helpers.
JHtml::addIncludePath(JPATH_COMPONENT.'/helpers/html');

So this only happens when I upgraded K2 to 2.5.4 from 2.5.1.

anything you know of please?