If I install an update directly from the AppExchange, will my existing configuration remain?
If you install an upgrade from the AppExchange, ALL of your existing configurations will remain in place and will NOT be reverted back.
The upgrades do NOT items that are administrator configurable. This include Page Layouts, picklist values.
As these items are not updated, it is important that you apply the post upgrade steps for all releases between the currently installed release and the upgraded release being installed.