I was just basing my actions off of this piece of text on the sp2 download page:
"You will need to test this beta with the RC1.6 version of SLES 10 SP3, which is included in the download below. Please note that this is also pre-release code and should only be installed in a test environment."
So I assumed I had to update the SLES components first before updating the
OES components. The SLES update went well and iFolder still works, but it's the same version I had before.
I have the sp2 beta, I just don't know how to install it....
-Farren