Basically, you just unzip it and copy camera raw.8bi to the correct folder. Here are the instructions for CS3 under Windows:
After downloading a ".zip" file, use the operating system or a utility such as WinZip or PKZIP to access the file's contents.
To install with Adobe Creative Suite 3 or Photoshop CS3:
1. Exit Photoshop CS3.
2. Open My Computer.
3. Double-click Local Disk (C.
4. Navigate to: (Please read directory carefully)
Program Files\Common Files\Adobe\Plug-Ins\CS3\File Formats
5. Move the existing Camera Raw.8bi plug-in to another location (for example, a new folder on your desktop). Ensure you keep this version in case you need to revert back.
6. Copy the Camera Raw plug-in, Camera Raw.8bi, from the download into the same folder as in step 4.
7. Launch Photoshop CS3 or Adobe Bridge.
Note: If generic camera thumbnails appear in Adobe Bridge, follow these steps:
1. Check to make sure the plug-in was installed in the correct directory in step 4 above.
2. Start Bridge.
3. Choose Tools > Cache > Purge Central Cache.
Important: Purging the Central Cache deletes cached thumbnail information for all folders. It also deletes labels, ratings, and rotation settings for read-only files (for example, files on a CD or locked files) or file formats that don't have XMP support.
*copied from http://forums.steves-digicams.com/editors-photoshop-etc/140477-cs3-opening-raw-files-canon-40d.html