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Install the /html/language/spanish/ folder into xoops-root/language/ - That will give you spanish for the XOOPS core.
To have spanish language for modules, you need to install each one individually in the xoops-root/modules/[modulename]/language/ folder. The ones included in your files are only for modules that come with the XOOPS core. To get the files for any other modules you use, visit the developer's site or the XOOPS local support site.
The install folder is only if you want to have the install instructions in spanish while you install a new XOOPS site.
The docs folder is for your benefit, you don't need to install that.
And the images... hmm, if you install them they will replace the standard XOOPS (english) ones, so I guess it's up to you whether you want that. I don't know how multilingual sites handle the core language-specific images problem... though to be honest I'm not sure that those images are even used. Most modules include their own images.