I'm starting to notice a general confusion about installing GM7 extensions. So, to alleviate this problem, here is a basic 'how to' guide.
1.) First, download an extension. It should be a .gex file (or one included in a archive format like zip). If archived, other files might be present as well, but the .gex file is what you want.
2.) If archived, unzip to a temp location such as your desktop. It doesn't really matter where, since you can remove/delete it after it's installed.
3.) Pop open Game Maker 7.x and double click where it says 'Extension Packages' in the tree view on to the left.
4.) This should bring up a dialog displaying various installed extensions. For now, click the button on the lower right that says 'install'.
5.) Another dialog appears, this time showing the various extensions you can uninstall. To install a new extension, click on the button at the top which says 'install'.
6.) Now you are given a typical 'open file' dialog. Go to the temp location where you placed the .gex file earlier. Then select open.
7.) You should now see it listed on the left with the other 'currently installed' extensions.
And that's it, you can now close out and even delete the original .gex file.
To uninstall an extension, do the same procedure as if installing (click the lower right install button), but instead of clicking install again, select an extension on the left and click uninstall.
Hope that helps.