Upgrades are indeed handled by Air Canada and not Aeroplan.
The problem is that last week Air Canada moved to a brand new reservation system (Amadeus), and to put it politely, that upgrade didn't go smoothly. There are lots of limitations and issues - some were predicted by AC, others were not.
See
https://www.flyertalk.com/forum/air-...g-amadeus.html for the exciting details.