Upload w3counter.php to the /wp-contents/plugins directory
Activate the plugin through the 'Plugins' menu in WordPress
Go to your admin dashboard and click the 'edit' link in the Blog Stats box to add your W3Counter website ID and password (provided at signup).
If you haven't already inserted the tracking code in your theme, go to the widgets page and drag the W3Counter Tracker widget onto your sidebar where you want the tracker to appear.