I am what you would call an HTML novice.  I can make website but am not very knowledgeable with how to integrate free templates into my websites.

I just downloaded it and it came with a few different files.  All of which I don't know what to do with!

-Index file containing the basic template.
-GIF file containing the color scheme of the template.
PSD file..?.

So these are the files I have.  What do I do?  Should I copy and paste the source code of the index page?  And if so what do I do with the other 2 files?  Just upload them to the site?

Thanks a lot.

Can one novice help another? :) The .psd file is an adobe photoshop picture format which can be viewed and edited with GIMP 2 image editor.
The web host I use, I have to upload the pictures to the dbase first grab the url assigned the pic, and when I use front page to build my page I insert the picture file from... and instead of using a directory on my hard drive I insert the url in it's place, the editor will access the internet and pull in the file. I upload the source to my site and that's how I insert themes and such. BTW, after the editor pulls in thepic then you can readjust the attributes which will alter the source for display.

Templates vary greatly depending on where they come from. From yr description, I'd suggest that the template you have is a layered Photoshop image so that you can make any changes to the design you wish, then export the images again as web images. However, having said that, if you need to use templates, you probably won't have the skillset to modify PSD files. You should seek out FrontPage templates instead, as these can be edited directly in FrontPage. There are plenty of these around, but they are not so pretty as the kind you have. You can also edit and save PSD web templates in Macromedia Fireworks, which is a bit more web friendly than Photoshop.