MY kernel system is: 2.4.20-4GB-athlon

Ive downloaded the latest kernel patch-2.6.10.bz2

How do i install it?

You can't. You must download the full source since you going from a 2.4.x to a 2.6.x

Patches work like this. You have a 2.4.20 kernel. You can patch that to 2.4.21. If you wanted to move up quite a bit, lets say to 2.4.26, you'd have to install all the patches sequentially. Like this:

Install the 2.4.21 patch
Then Install the 2.4.22 patch
Then Install the 2.4.23 patch
Then Install the 2.4.24 patch
Then Install the 2.4.25 patch
Then Install the 2.4.26 patch

Moving to the next "minor" version of a kernel (2.4 to 2.6) requires that you use the full source.

Well i have a ftp server running and by patching or upgrading the kernel i wish it oes not affect anything......could anyone walk me through upgrading the kernel? which kernel to download what commands please?

The question then is are you staying with the 2.4 series or moving to 2.6 ?

i think i might just patch the kernel? first...

Since you are at 2.4.20, you need to download the 2.4.21patch

So,
download the .bz patch
put it in /usr/src.
cd /usr/src/linux
bzip2 -dc ../patch-2.6.2.bz2 | patch -p1


Then your source tree will be essentially 2.4.21 although the directory is still called 2.4.20.

make menuconfig
change anything you wish to change and save
make bzImage
make modules
make modules_install
cp ./arch/i386/boot/bzImage /boot/bzImage-2.4.21
mkinitrd -k bzImage-2.4.21 -i initrd-2.4.21

Now edit your bootloader
vi /boot/grub/menu.lst

create lines identical to the first set except name the kernel bzImage-2.4.21 and name initrd to initrd-2.4.21. If you post your current menu.lst, I can edit it for you so you'll know what it should be.