the Desktop (icons) known from many previous releases of ERPNext got replaced by the look in your screenshot recently in v12 (develop branch). So from that perspective everything is as it should be.
if you update the previous installation mentioned it would change to the same UI as the new one
that depends on what you want to do.
If you want to run a production server … yes, you are running the wrong version. Develop is the bleeding edge unstable version of ERPNext. The current stable release is v11(which you get from the master branch).
this also is not good. Frappe and ERPNext should be on the same version (12, or 10 in your case and not different ones (12 & 10 in your case)
I managed to solve this using a hackish solution suggested in this linked post. (It took me 30 minutes to figure I should stop the site first before issuing the rm command. I deleted the file it it would be right there again. I thought I was going crazy),