If you have Impulse loaded, just open it and it can provide all updates necessary.
Keep in mind that the SoNE that I saw said:
**Only tested in Entrenchment 1.051**
(so far works in Diplo, but not tested)
So, if you don't have Entrentchment, I can't say it will work. Of course, any update since then could have bugged it up.
Once you've updated the game through Impulse (you can load it via your CD or the Impulse website) you can run the game to produce the appropriate mod folders. This must be done first.
To change folder options:
Go to Control Panel
Open Folder Options
Click the View tab at the top
Under Hidden Files and Folders in the list, click Show Hidden Files and Folders
Clikc Apply and Ok. This should allow you to see AppData in your Libraries folder
Go to AppData
Open Local
Open Ironclad Games
Open Sins of a Solar Empire
Mods belong in the folder Mods-(current version name and number)
As GoaFan pointed out, you need to go to Options from the Main Menu, not the In Game Menu.
When you activate a mod, you select the mod, press Enable Mod and then press Apply Changes.
That's it.