I have a rudd pe40-2 its dual anode .4 wires come from the heater black ,red ,blue and yellow.I'm using 10-2 wire from a 30 amp breaker.black and white connected to the breaker.

Normally all that is needed for a connection is the Black - Red from the supply to the Black /Red on the tank.

The yellow and blue leads should be connected to the anodes via an internal connection. Did you loosen or disconnect them?

This is an old model of water heater, why are you connecting it now? What happened?

I have a very old (1950) or so oil fed forced hot water system that is also for my hot water Its very inneficiant as well as costly to run with oil prices the way they are.
%The rudd unit came out of a cottage and was rarely used and is in fine shape according to my plumber.

I have not touched any of the internal wiring.As of right now the black and white wire are hot connected to the black and red on the tank.The yellow and blue are conncted to the ground wire that is comingout of my 10-2 wire wich in turn is connected to the ground bus bar in the main panel. It has been this way for 24 hours with no electrical probs. And I have hot water.Did I properly wire it?

Thanks

See page 20 of this manual:

http://globalimageserver.com/fetchDocument.aspx?id=de6b799a-5949-4d58-96b4-f679498464b1

Do any of the wiring diagrams match your unit?

With the blue and yellow connected to ground, I suspect you do not have the lower element connected to power so it will operate. No harm being done other than only one of two elements is working, a you will run out of hot water.

Fig.e with the 59t thermostat.what would the proper way to wire this to the 10-2?

Follow the diagram, the two # 10 wires from the cable connect to terminals #1 & #3 of the upper stat, the yellow to T3 2 on the upper stat, and blue to T #4 on the upper stat.

Be sure the lower element is connected per the diagram also.

I did exactly that the first night it seemed all right I had hot water hours 2 hours or so later it Popped the 30 amp breaker as well as the main breaker

Then something is not correct, sounds like both elements were on and that would trip the breaker.

The upper stat switches so that only the upper or lower element is on at one time. See the switch that flips between T# 2 and T# 4, fed by T #1?

The upper stat may be defective if all is wired correctly.

Can I get new stats at home depot,or does it have to be plumbing supply?
Besides the stat could it be anything else?

Big box stores will have the stats, both upper an lower.

As long as it is wired properly, the only problem should be the upper stat.

New stat installed per diagram ,wait to see what happens