Here you can read how to safe-update to avoid any issues: https://wp-dreams.com/knowledge-base/updating-from-older-versions/
Your settings will remain in tact after updating.
The error message you are getting is probably because you are trying to upload the wrong zip file downloaded from codecanyon. They usually contain the documentation as well. If you unpack it there should be another zip file called ajax-search-pro.zip
That's the one you need to upload.Best,
If you like my products, don't forget to rate them on codecanyon :)