Hi Jesse,
I'm very sorry about that. If you added custom files to the iolite folder, they will be overwritten during the update process.
This is why in the Installation Instructions,, we advise that you should change the location of your Reference Materials folder if you're going to add custom files (Step 6 in both the Windows and Mac instructions).
The reason that the update overwrites everything in the iolite folder is so that if iolite has become corrupted due to damaged or missing files, the update process can fix it. I know this must be super frustrating. We'll try to think of a better way to make this clear to our users.