In the Locate File window, use the Look in: drop-down box and/or the shortcuts on the left to navigate to the folder with the extracted driver files that you created in Step 2.
Important: There may be multiple folders within the extracted folder so be sure to work your way to the one for Windows 7 if it exists. Some downloads will also include both 32-bit and 64-bit versions of a driver with the 32-bit driver in one folder and the 64-bit version in another, sometimes nested under an operating system labeled folder as well.
Long story short: If nicely named folders exist, get your way to the one that makes the most sense based on your computer. If you're not that lucky, don't worry about it, just navigate to the folder with the extracted driver files.