So I learned this the hard way, but feel I should share in case anyone else has the same issue.
The instructions for upgrading the Xibo CMS state to take a backup of the settings.php file, and to replace (not on top) the CMS files on the web server. While this is what needs to be done, it should be noted that if you are deleting everything in the web folder of the Xibo CMS, leave the "library"folder intact and on the server, or take a copy of it and restore afterwords!
It would seem pretty self-explanatory, but nowhere in the documentation for upgrading does it say to take a copy of the library folder. It only mentions to take a backup of the database (hence without really looking, assumed that was where the images were stored).
That is all! Restored the library folder from a backup and everything is now running 1.7.7 just fine.