Inside the ZIP file is the MEF file. You will need to extract that into the meteo directory. You will need to have a site created first for your location. Then you will go to Import ASCII meteo file, under ASCII source, select your PSM weather file, change your names if necessary under "Hourly file to be created", and under conversion, select the MEF file (I have named it NREL PSM 5, but you can rename it to anything), click start conversion.
You will want to see 1990 grayed out in reference year. After you convert, view the meteo file and check the quality. You will most often need to implement a time shift. Re-run the conversion by adding the time shift by opening the conversion template and entering the shift under the date tab. Sorry if this was very brief or repetitive.
It's not clear to me what time shift is appropriate. I downloaded NSRDB data and did not select "convert UTC to local time". I then used the .MEF file which was posted by solarguru on 10/17/16 which included a shift of 5 hours. My site is located in UTC-5. I'm getting errors that "GlobHor" data is undefined, and also that my time seems mismatched. Does anyone know what the most appropriate way is to treat NSRDB data, specifically PSM v3?