1. Extract the template you have downloaded before.
2. Go to “Design” tab on your blog.
3. Go to “Edit HTML”.
4. Now click on “Download full template”. Just to have a backup.
5. Go to “Upload a template from a file on your hard drive: “
6. Click on browse and select the template from extracted folder.
7. Now upload [sometimes it asks whether to keep the widgets or delete. Select don’t delete it]
8. Save