Lestats Hill

Sooo I'll have to re root?

You can update it rooted. I updated while rooted and running GSE It wipes everything and reinstalls stock.

Im using a free one.

This is the one I used: https://play.google.com/store/apps/details?id=jackpal.androidterm&hl=en

Still getting the same thing. Could it be because im using the free one?

Its because you arent mounting r/w.

I just used it to remove the AlarmClock.apk with out issue. You need to do this:

su (enter)
mount -o rw,remount -t yaffs2 /dev/block/mtdblock4/system (enter) (this mounted r/w)
cd /system/app (enter)
rm nameofapk.apk

and it removes it.