Unlike ESX 3.5 where downloading the latest version to CD/DVD and booting would maintain all settings and VM’s, ESXi prevents this. If you boot with the latest version of ESXi it will fresh install ESXi wiping out any VM’s that you may have.
There is an update option within the VI client when you install it initially to install the VMware Infrastructure Update option. This often gets missed as it is not checked by default. If it is installed on your PC it should appear in Start – Programs – Vmware – VMware Infrastructure Update
If it is not there then you will need to remove your VI client and reinstall it, enabling the VMware Infrastructure Update option during the installation.
To update an ESXi server select Start – Programs – Vmware – VMware Infrastructure Update
Select the ‘Hosts’ tab and select the ESXi server that you would like to update
Click on the Updates tab and click on the ‘Check Now’ button
Click on ‘Install Updates’ to install the listed updates
Updates are downloaded and installed
During the update installation you will be prompted to provide authentication credentials
Installation should now continue