As I said, this is a KNOWN bug. To confirm this, you can try the following. You need to get a copy of the database that you can play with. Get this onto another machine, and open it with the 3.70B client, you will get a message askiing if you want to convert the database. Once converted, create a NAVISION BACKUP of thedatabase, and try to restore it with 3.70B. If this works, and the 100% used DB error goes away, then you are good to go.
Now you will need to do a technical upgrade, as described here : NAV Technical Upgrade By the way, this error is very rare, and in fact when I first got the error in the US, Navision US could not find any mention of it. I had them contact Navision UK, (where I had last reported it), and they found it.So be aware that if you contact Microsoft about it, they may not be able to help without doing a lot of searching. I have only seen the error in versions 2.00, 2.50 and 3.6.
Oh and if you can not recover the Database with 3.70B executables there is still a good chance that it can be recovered using C/DART.
Sorry onemore thing. If you are on support, then go for the latest executables that you have for your region, So 5.00 is possible, otherwise 4.00 SP3. Its the same amount of work to do a technical upgrade to any version up to 5.00. So you might as well do it.