Red Hat Enterprise Linux v5.4 can be updated via RHN. RHEL 5.4 includes the kernel-based virtualization, and clustered, high-availability filesystem to support Microsoft Windows storage needs on Red Hat Enterprise Linux.

First login as root user and execute following commands

uname -a

The above commend will show you current kernel version of your running OS. Now here we will update our OS throuhg yum

 yum update

After successfully updating your OS reboot your system.

reboot

Verify the updates

 uname -a

The above command shold tell you that your kernel & OS has been upgraded.

Note: It is not the only way to set up a system. There are many methods of doing this task but this is the way I adopt.