I am trying to add a new theme to my site. under the Select theme area the new themes show up. But under the Choose Template it is only showing me the default option. the new themes are also under the Your themes :

What are you trying to do?

To add a theme, you just copy it to the /themes directory, which you already did.

To change the theme permanently for all, you just select the theme that you want to use in Admin -> Preferences -> General Settings

To easiest way to change themes for individual users is to activate the "Themes" block and make it visible to Admin (or to any group that you want to allow to change themes), and change it there.

For general info about XOOPS management I recommend the XOOPS Operations Guide

For theme development/modifications, there is no better book than the "Design for XOOPS" book