I am building a business plan and financial model for a software
company that distributes one piece of free trial software. Users pay
to unlock additional features.

I need a reasonable expected range of percentages for converting users
who have already downloaded the free version of software and created
an account into paying users. The paid version costs $19.99 and is in
the security and communications space. I need good soild sources for a
business plan and financial projection.

I've found this: http://www.webmasterworld.com/forum85/449.htm which may be helpful

This is not for converting web site visitors to downloaders. This is
converting people using the free version of a product (that they've
already downloaded) into paying users.

There are many steps in the software purchase process and clearly many
different processes. In an electronic (i.e. not retail) model for
registered freeware trials of consumer software, industry norms are on
the order of 1 to 1.5% conversion to the paid version (e.g. for
unlocking additional features). This is about half of what was
reported in the source you cited.

I am unable to provide a reference for this, as this is based upon
direct personal and corporate experience.