OK, to get rid of the "status": "Not capable masternode: Invalid protocol version" and "WATCHDOG_EXPIRED" errors, when updating, here's what I did:

1 --- RESET BLOCKCHAIN AND SETTINGS --- (This might not be necessary, but it will clear up any incorrect settings and stuck blocks)

1.1
Delete the entire .desirecore fodler

1.2
Restart the daemon again and let it sync the blocks, meanwhile restore the settings in the masternode.conf and desire.conf files

1.3
Once all the blocks are synced, restart it again

2 --- REMOVE ALL OLD NODES ---

2.2  Run the comand: ./desire-cli getpeerinfo | grep version and see of you have any connections using 70206

2.3 Run the comand: ./desire-cli getpeerinfo, for each node with wrong version  run: ./desire-cli disconnectnode

2.4 once you have only 70208 nodes, run start alias from your wallet.

3 --- INSTALL SENTINEL ---
Install sentinel following https://github.com/lazyboozer/sentinel . If it refuses to start, redo step 1

4  --- VERIFY ---
Verify that your node is PRE_ENABLED with
./desire-cli masternode list-conf

5  --- WAIT ---
Wait 10-20 min

Good Luck!