How to detect SLES version?

Try (for newer versions) cat /etc/os-release

If that does not work, try (for older versions) cat /etc/SuSE-release

Most probably you have got a SLES10 SP4.

Do a rpm -V sles-release - if /etc/SuSE-relase does not show "5" (i.e. changed md5-checksum) the file content is original.

If you update your question with your exact kernel version (uname -r) I can even tell you more.

You can also check which repositories are active on that system: zypper sl

Update on uname/zypper results:

Here is a list of SLES-kernels and their release dates. This shows your kernel to be a SLES10 SP4 released on 2011-10-28. There is a more recent SP4 kernel from 2012-01-23.

Your output from zypper sl puzzles me. I can not see how your system got to SLES10 SP4 - there are only SLES10 SP2 repositories shown.

I think it is worth to look into this a bit deeper... (see my current comment to your question)

Both files are part of the sles-release package, see rpm -qf /etc/SuSE-release /etc/issue.

That command will output which version of that package you have installed.

I suspect that you have modified /etc/issue and the latest update will have created a file /etc/issue.rpmnew. Changes are that file says 10.4.

So that would indicate you have SLES 10.4.

But you should not rely on those files too much. For SLES you need to check which repositories are configured in yast. I'm no SLES expert so I can't help with that part but it should get you started.

Here is page showing how to update a SLES system between various SP's.