Mod folders work when they have the extension .smod, but also when they are compressed files (.zip) or when they are just normal open folders.
I know the last one is true, because I use that for developing the mod. I tweak, and I restart the game to see the changes, but I do not go trough the effort of making it into a .smod everytime (imagine that ).
As for the .zip’s.
.zip’s are the true identity of .smod’s, you can use that trick to see inside (and thus
to mod) the .smod folders. You just rename mod.smod to mod.zip, ignore the warning your computer gives you, and extract the entire contents of the mod in a normal folder. It works.
When I packaged the mod for download, I simply compressed all the mods content from the normal open mod file into a compressed file (.zip), and put that file into the forum thread.
All you need to do is take the folder you’ve downloaded, and place it among your .smod’s. If you reallly want a .smod, then change the extension.