Right, I want to upgrade from 3.40 oe-a on an original psp because I want to play Patapon and it won't run on my 3.40 OE-A.

Problem is I have a custom theme with a custom background, wave, volume bar, battery bar, cold boot and gameboot.

I've heard I can't use these current RCOs on the updated themes? I want to keep them if I can and can't figure out how

I also think I need some sort of kernal to play all my old homebrew apps along with my ISOs?
Helps?

I can't help you with the customisations as I don't use any.
If you upgrade to 3.52 M33-4 (via 3.52 M33) you won't need the 1.50 kernel for homebrew.
However if you upgrade higher (such as to 3.90 M33-2), you will need the 1.50 kernel add-on.

So I take it 3.90 m33-2 is the newest one? Can I update straight to 3.90 m33-2? Since I'm going to just abandom my theme by the looks of it and look for a new one.

3.90 M33-2 is the newest one; the quickest route is:
3.40 OE-A - 3.52 M33 - 3.52 M33-4 - 3.90 M33-2
Dark_AleX's website has all the custom firmware files: http://www.dark-alex.org/
PSP-Hacks have all the official firmware files you'll need: http://www.psp-hacks.com/category/36

i'm using 3.71 m33-2 and yes custom rco's does work with it... you can still use some of your rco's except for the topmenu which should be always compatible wth you cfw... you can dl some of the latest custom xmb through here