A new version of .NET or Data Quality Services was installed on this machine. In order to continue to work with DQS please run 'DqsInstaller.exe -upgrade'

I recently tried to use Data Quality Services 2012 and as a result of my having applied service packs / Cumulative updates / hotfixes, etc. to my dev box, I got this error on launch of DQS:

A new version of .NET or Data Quality Services was installed on this machine. In order to continue to work with DQS please run 'DqsInstaller.exe -upgrade'.

That would be fine, if it actually worked like that.  Unfortunately, even after running this and being told I need to restart, restarting, running it again and restarting again, when I launch DQS, I got the new and improved message:

A new version of .NET or Data Quality Services was installed on this machine. In order to continue to work with DQS please run 'DqsInstaller.exe -upgrade'.

OK...I thought I had better try getting some help on the dqsinstaller and see if that leads to anything...

dqsinstaller.exe /?

Microsoft (R) DQS Installer Command Line Tool

Copyright (c) 2012 Microsoft. All rights reserved.

[11/15/2013 11:37:52 AM] DQS Installer started. Installation log will be

written to C:\Program Files\Microsoft SQL Server\MSSQL11.MSSQLSERVER\MSSQL\Log\DQS_install.log

[11/15/2013 11:37:52 AM] Parsing DqsInstaller command line arguments.

usage DqsInstaller.exe [-install | -uninstall | -upgrade |-upgradedlls | -exportkbs | -importkbs] [] [-collation] |[-instance] 'instance name'

-install   - Install Data Quality Services in the provided instance. (Default)

-uninstall - Uninstall Data Quality Services from the provided instance.

-upgrade  - Upgrade Data Quality Services for the provided instance, to current version.

-upgradedlls - Install Data Quality Services while skipping recreating the DQS databases and only upgrade DQS DLLs.

-exportkbs - Export all server knowledgebases.

-importkbs - Import knowledgebases file to server.

-collation - The collation of DB catalogs to install. The collation should be case insensitive.

 - The .dqsb filename used to import/export server backup data.

-instance - Specify the SQL Server instance name that this installer will run against.

-? - Show this usage message.

When catalog collation is not specified the default collation being used is SQL_Latin1_General_CP1_CI_AS.

List of Windows and SQL Server collations can be found at http://msdn.microsoft.com/en-us/library/ff848763.aspx

Press any key to continue...

And this sounded like it might fit the bill:

dqsinstaller.exe -upgradedlls

Wallah, all fixed!  Hope this helps if you have a similar issue.

Heads up - you will need to be a member of the fixed server admin role on the SQL Server instance where the Data Quality Database is installed.