I have a successful Wordpress site with a theme that suddenly quit working right and the designer said there was an update for it. So I tried to install the update and got the message:
"destination folder already exists... install failed"
A Wordpress thread dealing with that issue recommended going through ftp to delete the theme folder. So I tried to do that but keep getting an error message, however suddenly my site shows up in the default wordpress TwentyTwelve theme (yuck) AND it still gives me the same message when I try to upload the updated theme.
Okay, since the theme folder wouldn't delete, I just re-named it and then I was able to install successfully, sorry.