I have Mac OS X Version 10.5.8 what do I need to do to upgrade to the latest version of software??

Depends what MacBook version you have.

Go to  > About This Mac > More Info > hardware overview (should open at that usually).

Check the model identifier (MacBook4.1 or similar)

Check Processer Name

Processer speed

Memory

Specs for Snow Leopard (10.6.x)

And for Lion (10.7.x);

Note that the memory quoted in those specs is absolute minimum for each OS - 106 really needs at least 2GB and Lion 4GB

Provided your Mac meets the specifications, purchase the Snow Leopard Installer DVD from the Apple online store (it's no longer available from the retail stores).

Install that and use the combo updater to bring it 10.6.8.

In 10.6.8, create an account with the AppStore and purchase and install Lion.

You will need to update several applications for SL, and more for Lion.

No PPC applications will work in Lion (Appleworks, MS Office prior to 2008, multiple Adobe apps).

If your printer or scanner is more than a year or so old, you may have difficulty updating drivers for those too.

For what it's worth, I'd go to Snow Leopard and stick there. Lion is apparently quite sluggish on older hardware, even with 4GB RAM.

You might like to try Lion on someone else's Mac or in a store before contemplating upgrading to it - it's not to everyone's taste.

Just buy Snow Leopard for like $30 and do an upgrade install. your macbook should run just fine.