Patch/Upgrade 5.0.34 to 5.0.96

[Mark Penfold]

I've got limited exposure to mysql although I'm competent with Oracle and SQLServer, so sorry if this is a stupid question or I get any of the terminology wrong.

I have a version of mysql that came embedded with a third party product. For security reasons I have been tasked with patching the current version which is 5.0.34 enterprise-nt (commercial) to a version that is > .70.
From the Oracle site I have downloaded an executable for 5.0.96 enterprise classic.

I ran the .exe on the server with the embedded mysql and chose the existing installation directory as my destination directory. I was expecting it to upgrade the existing system/database. I do now have a working version 5.0.96 installation however the ibdata file, which I assume is the underlying database was overwritten. My old file was 240 Mb, the new one is much smaller, and the third party application no longer works. So it looks as though what I have accomplished is to uninstall the old version and install a new vanilla version.
I do have a VM snapshot of the whole server that I can revert to, so all is not lost, but I need to understand what steps I need to take to successfully patch (or upgrade if that is the correct term) from 5.0.34 to 5.0.96
Thanks
Mark