It seems that the system-config-packages appliction (the add/remove programs) may be broken;
You are free to download the source for system-config-packages extract and apply the patch (see the first link) to see if this fixes the problem.
Yes it is possible to undo the kernel update, but this is not advisable since the updated kernel fixes a number of issues. Do a quick check and see if you have the older kernel still available for booting;
rpm -qa 'kernel*'
If you see more then one kernel (version number wise) then you can simply edit the /boot/grub/grub.conf file to boot the system to the older kernel. If not then install the older kernel from the installation media (by hand from the mounted media) or from RHN. To install the older kernel kernel as root from the console or xterm session type something like;
rpm -ivh kernel-<version-number-here>*.rpm --oldpackage
This should install the older kernel keeping the new kernel installed, this way you can choose which kernel to boot the system(s). Please install the same type of kernel that is currenty running, hint: uname -a