Decompress the module in your sites/all/modules folder.
Go to admin/build/modules (Admin » Site Building » Modules) and select the new module (under package named "Filters input".)
Go to admin/settings/filters (Admin » Site Configuration » Input formats) and select the Insert node filter1.
Make sure that the text areas using the [node:...] tag make use of one of the formats having this Insert node filter turned on. The Input format field set shows [node:123 parameters] for any format that supports the Insert node filter.
You are ready!