first you unzip the file so you have the "car.ar" file and you then copy it and put it in the main midtown madness 2 Dir which you can get to like this C:\Program Files\Microsoft Games\Midtown Madness 2
omg i have to tell sooo many people this extract the file to: my computer/local disc (c:)/program files/microsoft games/midtown madness 2 then the car should be in ur car selection