I'm new and nervous to this.
I've now downloaded the newest stable indie build. Should I simply just replace the old files in my LiteStepDir with the new in the zip?
Also this: can I move my LiteStepDir from C:\Program files\ to c:\ without doing anything else or do I need to change something in the registry db?

you can simply overwrite the old files in your LitestepDir with the newest indie build files (but you cannot do this if you are running Litestep of course). As to moving the whole litestep folder: yes it would be possible, but why not do it the proper way by uninstall + re-install to your new dir?

1. you can just overwrite the old files with the new. however, you'll have to shut down the litestep shell, otherwise the files are being used and you won't be able to copy over them.
2. there's a few changes, I'm sure, but I have no idea what they are. easiest thing probably, copy your themes folder to another location (out of the litestep folder completely), remove litestep, then re-install into c:. oh, then copy your themes back into c:\litestep\.
that should be about it... oh, if you've customized anything else (popup, additional modules, etc), copy those out also before removing.

changes are always stated in changes.txt =P

files called "changes.txt" tend to be even more unpopular then files called "readme.txt" though. ;P