To upgrade, you generally boot the new TempleOS CD/DVD, install on top of your drive, modify your files and set it to boot your new /Kernel.BIN.C by executing BootHDIns(). Often, your code will have to be modified to work with the new version. See Change Log. You might have to boot an alternate drive or the CD and modify your code until it boots okay. See the Installing documentation.
Upgrading TempleOS