Since version 1.5.4 LMS was released in polish language only. If you are upgrading read polish documentation for upgrade description. In newest versions upgrade is very easy. That process has two stages. Before you start check LMS requirements (they're changing). Also if you're using MySQL check user privileges, they're changed few times in the past.
Now, overwrite old files with new ones and remove contents of templates_c directory (or better create new LMS directory tree). Second stage is a database structure change - it's self-executing process acting upon first login to the UI.
If you've got CVS version you've to install Smarty library. Just copy contents of Smarty's /lib directory to /lib/Smarty. It can be done (including Smarty download) automatic with use of /devel/smarty_install.sh script.