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Choosing the option to let the 7.13 installation media remove Xenapp 6.5 resulted in a 1603 error.
Error 1603 and the details.
The VDA at this point did not install on the 2008R2 O/S.
I then installed the VDA from the Xenapp 7.13 ISO.
A few install errors appeared but the install carried through once you hit OK.
Interesting to note I checked to see the VDA was registered in XA7 Studio Console and indeed it was.
Problems continued and I was unable to launch any applications.
Checked STA configuration.
Checked install logs in %AppData% on the VDA. (Local folder)
Because I knew there was a problem when installing the VDA on Server 2008r2 image I uninstalled the VDA software and any left over XA6.5 components.
From this point the VDA installed cleanly along with Receiver.
My apps could now be launched.
I will make another attempt at this to see if I can cleanly upgrade the VDA otherwise I will resort to a manual uninstall of 6.5.
I will update this post soon.
I know this is not rocket science but hopefully it will help someone.