upgrade RC2 to RC3

If i'm asked to remove the upgrade files/folder on step 2 then how can i run in later as said on step 3?

I wouldn't upgrade. Stick with RC2!

You have to only remove the htaccess file from the upgrade map, else you will get a error on screen. 
After finish the upgrade remove the upgrade map from your server.

I have done fresh install and wish I hadn't.

Strange that you have problems.
I have a working site after updating from RC2 to RC3 without any problems.