Which version of the system menu do you have, and do you have the correct preloader hacks file for it? 4.1 isn't compatible with 4.0 hacks, etc.
As for what happens when you update, that largely depends on what system you already have, what you're updating to (4.1 if you're using MPT), and if you've ever downgraded before. If you have 4.0 and update to 4.1 for example, you'll need to reinstall preloader but that's about it. If you used to have 4.x, downgraded to 3.2 (which you shouldn't do, but some people do anyway) and then try to update to 3.4, you'll brick your Wii. If you have 3.2 from the factory and have never downgraded, upgrading to 3.4 will break twilight hack, but leave most everything else the same.
So, what version do you currently have? I can give suggestions based on that.