how to upgrade os 10.4 to 10.7

Depends what Mac the 'old desktop' is. If a PPC Mac you can get no further than Leopard 10.5.8. Leopard can be purchased from Amazon or eBay.

If an Intel Mac you can bypass Leopard and go straight to Snow Leopard:

Start by checking if you can run Snow Leopard:

Requirements for OS X 10.6 'Snow Leopard'

http://support.apple.com/kb/SP575

The OS 10.6 Snow Leopard install DVD is available for $19.99 from the Apple Store:

http://store.apple.com/us/product/MC573/mac-os-x-106-snow-leopard

and in the UK:

http://store.apple.com/uk/product/MC573/mac-os-x-106-snow-leopard

but nobody knows for how long it will be available.

When you have installed it, run Software Update to download and install the latest updates for Snow Leopard to bring it up to 10.6.8, or download the combo update from here:

http://support.apple.com/kb/DL1399

Check via Software Update whether further updates are required.

You should now see the App Store icon, and you now need to set up your account:

http://support.apple.com/kb/HT4479

To use iCloud you have to upgrade at least to Lion, but some functions are only available in Mountain Lion:

http://support.apple.com/kb/HT4759

You can also purchase the code to use to download Lion (Lion requires an Intel-based Mac with a Core 2 Duo, i3, i5, i7 or Xeon processor and 2GB of RAM, running the latest version of Snow Leopard), or you can purchase Mountain Lion from the App Store - if you can run that:

http://www.apple.com/osx/specs/