Here's the quickest and easiest way to install locomotives/Mu's on MSTS:
1. unzip the file to a temporary folder. the default is C:/unzipped
2. go to the temporary folder and find the folder within it that has the locomotive name (ex. LIRR RS1 461); copy this folder.
3. here's where it gets tough: go to the C:/Program Files/Microsoft Games/Train Simulator/Trains/Trainset
4. once inside the Trainset folder, paste the folder you copied from C:/unzipped. after checking the folder has appeared, close the window.
5. insert MSTS disc 2 (the orange one) into your CD-ROM drive
6. go to Start>All Programs>Microsoft Games>Train Simulator>Train Simulator Editors and Tools; open it.
7. once the MSTS eitors and tools has opened (it may take a minute), go to the Activity Editor
8. once in activity editor, go to File>New. You'll seea route name come up, just click Ok. Next, it will prompt you to name the activity, also just click Ok.
9. under the section "Player" on the middle right, hit "New"
10. under the "Consist" heading, hit "New"
11. find the appropriate loco/car type (ex. diesel) from the drop down menu and scroll down the list until you locate the name of the loco you just put into the Trainset folder
12. now double-click on the loco and you will see it appear on the bottom. simply repeat step 11 to add more cars to the consist. before exiting, make sure to name your consist and save it as well.
13. finally, go into MSTS as normal and the train should appear in the same menu with all of the default ones.