To upgrade from a SQL Server 7.0 active/passive failover cluster
You must install the binaries to a local drive and use a cluster disk for the data. This local drive is a path, which is a non-clustered disk valid on all nodes of the cluster. This drive on all nodes of the cluster must have at least 300 megabytes (MB) of available space.
For more information, see How to upgrade from a default instance to a default clustered instance of SQL Server 2000 (SQL Server Setup).