Update older version and where to place new one

Hey Folks ~ I have an older version of WP from 2005 that I used as a mydomain.com/blog that is currently installed on my ISP’s server. What I want to do now is use a WP template as my new website design and I’m not sure where to install. When I access the server’s control panel I am prompted to select a specific install location directory under ” Select a Database User and Database Name to Manage. There are several options:
/public/wordpress
/public/wordpress/wp-admin
/public/wordpress/wp-content
/public/wordpress/wp-includes
/public/wordpress_13018000045

At this point I’m not sure how to proceed because someone suggested that I install the new version of WP in a separate folder until all the design changes are complete and ready to go on-line.

This is all new to me, so your patience and help is much appreciated.

Many thanks…. Jeff Amberg 803 254 5003