| Is it possible to update it in Skin Studio, to conform to current WB versions? |
Yes, that is definitely is possible. I've done it many times myself.
| Would I need to create new/additional graphics |
Without doubt, yes! Alot of changes has been made to WB since 2002.
Without even looking at the skin, I'd bet there are no shellstyles, no startmenu plus a 'kazillion' other things that could need a fix, so yes you're looking at quite a task if it is the first time you try it.
If you need any further help, don't hesitate contacting me via email - can be found in my profile 
Good luck!
