changing forum from php to .html and upgrading

[SEOvB]

Your server has to be setup to handle the .html extension into php to use the option from vBulletin.com/members

(More Options while downloading, php file extension from drop down.)

I'm not sure how you'd get php to parse true html files with php in them.

If you want the search engine friendly URL's i suggest checking out any of the free URL rewritting options or vBSEO