Assets (rolling stock, buildings, signals, track, etc) are largely compatible between the two programs - but not quite everything I suspect. Scenarios are definitely not compatible, they only run in TRS2004.
TRS2004 and TRS2006 are separate programs. There is no update path from one program to the other except purchasing the full version of the other program. You can have both installed on the same computer at the same time (with a need for a small technical tweak to switch downloads between the two). Each program does have its own separate upgrade path within its own service packs, TRS2004 up to SP4 and TRS2006 up to SP1 at the moment.
Hope this helps, John