You can use a 3 wire feeder to supply a separate building, if...

• The installation was in compliance with a previous edition of National Electrical Code (existing premises wiring).
• An equipment grounding conductor is not run with the supply to the structure.
• There are no continuous metallic paths bonded to the grounding system in each structure (bonded water, or gas piping, other conduit, etc.).
• Ground-fault protection of equipment has not been installed on the supply side of the feeders.

National Electrical Code 2014

Article 250 Grounding and Bonding

II. System Grounding

250.32 Buildings or Structures Supplied by a Feeder(s) or Branch Circuit(s).

(B) Grounded Systems.

(1) Supplied by a Feeder or Branch Circuit. An equipment grounding conductor as described in 250.118 shall be run with the supply conductors and be connected to the building or structure disconnecting means and to the grounding electrode(s). The equipment grounding conductor shall be used for grounding or bonding of equipment, structures, or frames required to be grounded or bonded. The equipment grounding conductor shall be sized in accordance with 250.122. Any installed grounded conductor shall not be connected to the equipment grounding conductor or to the grounding electrode(s).

Exception No 1: For installations made in compliance with previous editions of this Code that permitted such connection, the grounded conductor run with the supply to the building or structure shall be permitted to serve as the ground-fault return path if all of the following requirements continue to be met:

(1) An equipment grounding conductor is not run with the supply to the building or structure.

(2) There are no continuous metallic paths bonded to the grounding system in each building or structure involved.

(3) Ground-fault protection of equipment has not been installed on the supply side of the feeder(s).

If the grounded conductor is used for grounding in accordance with the provision of this exception, the size of the grounded conductor shall not be smaller than the larger of either of the following:

(1) That required by 220.61

(2) That required by 250.122

Changing from a 30A breaker to a 50A breaker can only be done, if you also change the wires to 6 AWG. In which case you'll have to follow current codes, and install 6/3 with ground. Breakers (and fuses) are always sized to protect the wire connected to them, so you can't change the breaker size without also changing the wire size (unless you're going down e.g. 50A to 30A).

However, depending on what you're doing, you may not have to change the breaker at all. If the planned circuits in the structure are not going to be fully loaded, you may well be able to supply the subpanel with a 30A breaker. Just because the subpanel has 50 amperes worth of overcurrent protection, does not mean the supply breaker has to be 50A. Whether or not you actually need a 50A breaker on the supply, depends entirely on what the subpanel will be powering.

You are probably in violation of National Electric Code, article 250.32(B)(1) states that the grounded conductor(neutral), shall not be connected to the equipment grounding conductor(ground).

The general rule of thumb is the only point the ground and neutral get bonded together is at the first point of disconnect for any incoming system, be it utility, generator, or some other source. There are a few exceptions for specific situations but none of which I feel apply.

Easiest course of actions is to kill panel, un-bond bars, drive screw through one bar into chassis and make that ground bar, use the other isolated bar for neutral. With no other knowledge of your installation I would advise you be careful of the loose neutrals while making the swap, if any are somehow being used by circuits from the other panel(it happens) they could shock you.