Hi,
1- SEPM is up and running and licensed (my upgrade did not appear to be licensed, nor could I find the place to activate it) ((with the fresh install, the license details are very easy to locate)).
--> Check this article: http://bit.ly/K56HXM
2- I imported my old policies, but nothing else. I have no groups or clients. (I have manually created my groups)
--> Actually there is a way recover the group structure however it's fine if you would have created them correctly
3- Can I get the new install of 12.1 to communicate to my 11.7 clients (I do not know the encrypted password that was used with the previous installation).
--> You can use sylink replacer tool to point existing SEP clients to the new SEPM manager.
Restoring communication to clients with a new Sylink.xml file
http://www.symantec.com/business/support/index?page=content&id=TECH106288
You have not mentioned specific version details so I will prefer to deploy fresh new client packages.
Configuring and deploying client software on Windows computers
http://www.symantec.com/business/support/index?page=content&id=HOWTO26790