The .zip will have an upload/ directory, with XenForo files within it.
Your web site has the 1.0.4 file in a certain directory, the content of upload goes inside it. Not upload itself.
It seems that from the ftp screenshot you uploaded the entire folder /upload into your forum directory. You need to upload the contents that is within the /upload folder into you /forums directory.
overwriting the other content that are already there.. but make sure you DO NOT override the /library/config.php file neither the /data or /internal_data folder
Yes, but I have no time today to assist anybody with an upgrade. Otherwise you could have hired me to demonstrate how to upload XenForo to an existing site - and to demonstrate which options to think about.