OOg: yes dont overwrite previous skins, the best way to update is to actually change skins in XBMC before you actually delete the skin folder you are updating (because XBMC still needs access to the media files, and some wont get deleted).
-Also please remeber, that when Kotix releases a new version of his skin, that he uses the most recent build of XBMC to design around (meaning the same day of his release). So if there are any problems, first try updating to that day's release, and if the problem persists, then report it as a bug.
After I posted the problem, I did just what you stated above. I deleted the entire Orbs folder, then put in the new one. Same deal.
Then since I was already having issues with XBMC (slow, and I took it away from being my default dash), I just deleted XMBC entirely. I then reinstalled the latest version I can get my hands on (the same one that was already on ther [4-1-2005]).
And I then put the new Orbs skin back in.....still the same thing.
And...on a side note...Project Mayhem III beta, is a nice skin.