There are two branches right now: 1.6.0 (the "stable" versions, headed for a Play update) and 1.6.1 (the "work in progress" versions).
Android won't let you go back from 1.6.1 to 1.6.0, or from 1.6.1-dev3.6 to 1.6.1-dev1 (to pick some examples).
You should however be able to go "forward" from 1.6.0.10 to 1.6.0.10-7, or to 1.6.1-dev1 or to 1.6.1-dev4 (or from 1.6.1-dev3.6 to 1.6.1-dev4, or any other version as long as it's an "UPgrade" not "DOWNgrade").
If Android doesn't let you install 1.6.1-dev4 over 1.6.1-dev3.6 -- this is wrong, but I really don't know. I'd try "erasing cache partition", or rebooting the phone, or disabling the anti-virus, that sort of thing.
Oh another thing, I understand that Android's "multi-user" thing can interfere (where you can have additional "user accounts" created on the device).