I tried to install python 2.5.4 on Ubuntu 11.04. I need to be able to remove my original installation of this older python, and then get instructions on installing. Further, will I have to tell the system which python to use or will it figure it out?
You need to tell scripts which version of python they should be using, otherwise the system will choose for you and it will always be the same one. There is an environment variable that also controls the python version executed when the script uses the envvar bang line (instead of #!/usr/bin/python).
If you need an older version of python, you should try to install it via a debian package. If you can't find one, then you should not install it and simply use a binary package in /opt and redirect all your scripts to use that python. I presume you might not know how to use chroot or anything similar.