Nice one! Due to the aqua buttons you use in this theme I would give the theme a name with "aqua" in it. But I don't have an exact title for you right now
Clone the template set firstly. After that you can edit the cloned template set. In the Preferences you can select the cloned template set as standard for your site.
Yes, and I think your hoster doesn't care much about security too! Because PHP 4.3.10 isn't just a new version. There were many bugs and security flaws fixed since 4.0.6. So you should force your hoster to upgrade the PHP version!
PHP 4.1.0 is a MUST for installing Xoops. Anyways you should have an even newer version of PHP installed. But you only have 4.0.6. The latest is 4.3.10