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3. Upload the content of the htdocs folder over your existing files
a) You have "unstuffed" the XOOPS Zip file to your hard drive. One the sub-directories will be
/htdocs
b) Assuming that your XOOPS is installed on your server in a directory:
/xxx
then you take all the files from
/htdocs
and copy them over there, overwriting the existing files.
If you're not sure, just check the structure of your directories. If it has following subdirectories:
/cache
/class
/extras
/...
/modules
/templates_c
then this is a directory containing XOOPS.