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Something that just occurred to me. When you installed Book Designer 4.0 (before you did anything with the update) did you unzip the folder in your "Book Designer" folder? If so, that might explain what you've got now.
I did that myself the first time and ended up uninstalling the program and reinstalling it. That first file you should just unzip it in your download file. When you double click on the installation icon, it'll ask you where you want it installed and that's when you should direct it to your Book Designer folder. It'll create another folder inside Book Designer called "Book Designer 4.0".
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