The default action is to install over a previous version but it is possible to select a new folder if you wish to retain the older release. No manual uninstall is required.
Preferences (including directories for LAME etc.) are stored in the Registry so "shouldn't" need relocating (if I remember correctly), but I would make a note of the directory from within the current version of Audacity to minimise the hassle in case it does become necessary to reset the location.