This is a very well known issue. The Adobe Updater for Acrobat 7 SHOULD know what to update to. I have Acrobat 7.0.1 Pro, and the updater lists 7.0.5 and up as the available updates, which says it will update to 7.0.5 from any version from 7.0 - 7.3. I get this same error on about 10% of the machines I maintain.

But this is par for the course for Adobe updates (even worse in the newer software). Their updaters haven't worked in years... nothing you can do. Either try downloading and installing manually, or contact them directly.

Sorry for the bad news. I see this a few times a week with all versions of Adobe software (I'm a consultant). These apps are in the correct places (applications folder), nothing special.