How to update Joomla 1.6 to 2.5 manually
You can upgrade Joomla 1.6 to 2.5 manually in a few steps. First, you have to download the 2.5 stable update package from the official Joomla site. If your Joomla 1.6 is an older version than 1.6.5, it's not a bad idea to update it to 1.6.5 first. You can do this with the 1.6.0 to 1.6.5 update package.
After you download the 2.5 stable update patch (e.g. 2.5.0 or 2.5.1) to your local computer, unzip the archive and use an FTP client to upload its content to the root Joomla directory on your Joomla hosting account. Overwrite the old files.
Then you should remove the files and folders that are not needed for your new Joomla version. You can find a list (with the paths) of the files and folders that you have to delete in a file called scripts.php. You can find the file in the update package on your local computer (administrator/components/com_admin/scripts.php) or on your hosting account in the same Joomla folder. The two lists are at the end of the file.
Finally, you have to update the database. You can find the files with the SQL queries that you have to execute in a folder in the update package (administrator/components/com_admin/sql/updates/mysql) or on your account. Each file has SQL queries in it. You can execute the queries through phpMyAdmin.
There's a link to it in the Databases section of the Pixie control panel. Once in phpMyAdmin open the particular database, click on the SQL tab and paste the query in the textarea there. Then just click on the Go button to execute it. Before you do it however you have to replace the necessary part in the query (#__) with the actual database table prefix. After you execute the queries contained in each SQL file, your Joomla will be updated to version 2.5.
For more details you can also check out the tutorial on how to update Joomla from 1.6 to 2.5 manually.