Cant install OS X Sierra: requires OS X Server update?
The answer can be found on the Apple message boards and I can confirm this worked for me:


As root using sudo command from Terminal, delete the /Library/Server folder using the following command: sudo rm -rf /Library/Server
Within Finder, delete "Server" application from the "Applications" folder.


I realize you did remove the server.app folder, but the Library/Server folder must also be removed and was hidden from the finder. I only found it through terminal.

The person on the apple forum must have been from the team and knew what the installer was looking for.