From SEWiki

Installtion

Most mods are installed by extracting them to the GameTypes subdirectory of the root directory (where the EXE is).

Example

If your installed location is: C:\Program Files\Strategy First\Malfador Machinations\Space Empires V

Then the extraction location should be: C:\Program Files\Strategy First\Malfador Machinations\Space Empires V\GameTypes

Preceded by: Combining mods

Manual (SEV) Section 17.4

Followed by: Installing new shipsets