Several things come to mind:

>>I would like to upgrade in order to obtain higher quality, sharper and crisper images.

I have the D60 and the Nikon 18-55 kit lens (same sensor as your D40x). I also have the D200, the D300 and some of the best lenses that Nikon makes. There is hardly any difference between what I get from the D60 and the top-end gear (otherwise I wouldn't bother with the D60). You may have a problem with your shooting technique and gear may not solve that. Why not post some images so we can try to diagnose the problem?

>> ..I am down to the Nikon D90 and the Pentax K7... What scares me to death is spending the money just to find it sitting on my shelf so to speak, due to the complexity of these cameras.

I don't have the D90 but I believe it has the same result-program settings as the D40x. You can use it in just the same way as the D40x. If you decide you want to get more control of the camera then the user interface (buttons) give access to these parameters. (In fact the D40x/D60 can do many of the things the D90 does but the advanced features are only activated within certain program modes or else in the menus)..

>> Also, would I be better off just upgrading to some high end Nikon lenses for my current camera.

I'm still getting to know the 18-55 (I bought it recently for $70 - my D60 came with a 16-85VR). My impressions for the time being are that the 18-55 feels cheap but performs really well, within it's rather limited range of possibilities.