Updating template question..

when updating from 1.2 to 1.3, do i have to move over the overwrite.css file as well as other files and background images in the image folder to the new template or will it do that form me.

Hi.
Yes you have to back-up all files that you have changed, copy all theme folder to PC. It will be safer.
Then upload new theme files --- then you can upload files from back-up.
Of course during theme update you don't have to override for example /images folder or override.css file.

p.s.
On Sunday I will add full article about Theme update on our Wiki.

could you give me a link to that article??

Sure: http://www.gavick.com/documentation/wor ... -gk-theme/

It was in "Wordpress Beginner’s Guide" category.