When going from Forms 10.0 to 10.1, one of the steps during the database upgrade is to actually delete the instance data that was previously marked for deletion from the database. To clarify, in earlier versions of Forms, when you "deleted" instances, the data still stayed in the database, but was just flagged as "deleted" so it wouldn't show up in the web interface. In Forms 10.1, we now actually delete the instance data from the database. Therefore, when you are updating the Forms database to the 10.1 schema, it will locate all instance data that had been marked for deletion and delete that.
If there is a lot of instance data to be deleted, the upgrade process can take a while processing this step. However, if the procedure times out, the Forms upgrade could hang.
If you can restore a backup of the Forms 10.0 database, then you can manually run the SQL queries from C:\Program Files\Laserfiche\Laserfiche Forms\Forms\SQL\mssql_upg100_101.sql in SQL Server Management Studio and that should be able to complete, even with a lot of instance data to delete.
If you do not have a backup of the Forms 10.0 database that you can restore, then I would suggest backing up the current database and provide that to Laserfiche Support by first opening a case.