Make sure you have a compatible SD-Card inserted in your CyBook.
Copy the FW-Folder including its content to the root (\ ) Folder of your SD-Card
Download the firmware update packages 1.5 and 2.0 from Bookeen website <http://www.bookeen.com/support/ebook-downloads.aspx>
Unzip the update package 1.5 and place the file "update_kernel" into the new \FW\MOBI folder.
Unzip the update package 2.0 and place the file "update_kernel" into the new \FW\EPUB folder.

To use firmware 1.5, run the batch file  \FW\mobi.bat  directly of the SD-card
To use firmware 2.0, run the batch file  \FW\epub.bat  directly of the SD-card

That will place the respective update file in the root of your SD-card. If present  a previous update file will be deleted before.
To start the update progress, follow the  below guide (from bookeen.com)

How to Install
1. Make sure your Cybook has enough power to operate (at least 50%, recharge the battery if necessary).
2. Switch off your device.
3. Switch on your device.
4. When the boot image is visible (Cybook & Bookeen logotypes), press the center key of the navigation button and keep it pressed for a few seconds until the screen flashes.
5. When the screen flashes, you can release the key; the upgrade process is launched.
6. The upgrade should be completed after a couple of minutes.
7. When the upgrade is completed, the Cybook is switched off.
8. Congratulations! Your Cybook has been upgraded.

You do not need to delete the update_kernel file from your CyBook, because the update progress is not started, unless you hold the navigation center key during start. This file is deleted and replaced, when you next choose to run the other batch file.