To update the firmware on your K800i you need to download the Update Service application from the Sony Ericsson website and follow the instructions. You'll need an internet connection when you run it as the Update Service application downloads more data. You will also need the USB data cable that came with your phone.
Hit Google with this search 'Sony Ericsson Update Service site:sonyericsson.com' to get a direct link to the right page called 'Sony Ericsson - Support - Product support'.
Regarding the Music Player I had the same problem of mp3 ringtones appearing in the list of music tracks.
To fix this go to File Manager, then Music. Here you'll see all your audio files including midi, 3gp and mp3 files. Move the mp3 ringtones into the Ringtones folder and they will no longer appear in the Tracks listing in the Music Player.
I hope this helps.
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