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The extension should be installed either in $AVHOME\ext32 or in $USEREXT.

AVHOME is a system environment variable representing ArcView's installation directory.
USEREXT is a system environment variable that tells ArcView where to find user-installed extensions.

I recommend you install the extension in $USEREXT so you do not clutter up the directory for ArcView's core extensions. To enable ArcView sample extensions, you will need to set the USEREXT environment variable on your machine. This can be accomplished in 2 different ways:

1. Setting the USEREXT variable in the OS
2. Setting the USEREXT variable within the ArcView session

Setting the USEREXT variable in the OS

Use the Windows operating system to add the environement variable. Set the USEREXT variable to point to samples\ext in the ArcView installation directory. The benefit to this method is that it only needs to be done once. Here is an example of how to set the variable under Windows 2000:

1. Open System Properties (Start > Settings > Control Panel > System). Click the Advanced tab.
   
   
   
   
2. Click the Environment Variables button.
3. Click the New button for either User or System variables. If you have administrative privelege, you should set this as a system variable so it is available to all users.
4. Enter the Name USEREXT and the value c:\esri\av_gis30\arcview\samples\ext (if you have a standard ArcView installation; if not, set the value to the analogous location within your installation directory).
   
   
   
   
5. Click OK. You should see the new variable listed.
   
   
   
   

Setting the USEREXT variable in the ArcView session

You can set the USEREXT environment variable in your ArcView session. The drawback to this method is that you will need to set the variable in each ArcView project, or add it as the startup script in the default project. Create, compile, and run a new script containing the text

   System.SetEnvVar("USEREXT", System.GetEnvVar("AVHOME") + "/samples/ext")

When the sample extensions are available, you will see the FocalPatch Extension listed in the Available Extensions list.

Make sure to check the box in order to load FocalPatch.