[CentOS] system "stuck" with 2.6.18-128 kernel. how to move to 2.6.18-194.17?

> /etc/grub.conf points at 2.6.18-194.17, but when I reboot, 2.6.18-128 
> comes up.

I am suspecting that you are looking at /etc/grub.conf which is supposed 
to be a symlink to /boot/grub/grub.conf and somehow this is no longer a 
symlink, but rather a file of its own, which is not being read.

This is how this should look. (adjusted for screen wrap in a mail program)

# ls -la /etc/grub.conf
lrwxrwxrwx 1 root root 22 Sep 27  2008 /etc/grub.conf -> 
../boot/grub/grub.conf

What are the contents of your /boot/grub/grub.conf?  That is the actual 
file.  What is the default set to there?

Barry