Seeing all the questions about templates makes me feel a little better. Hopefully this has a simple answer, so
here goes:
1) I have a template (zip file) from another (non-hosting) web site.
2) How do I upload this template to use on my site?
Do I use the SFTP?
Do I upload the zipped file?
Do I unzip this file and upload a folder
containing the unzipped files? OR
Do I upload each individual unzipped files?
with any template you use with designing your site you have to unzip the file and upload each individual file.
Now if you want to have a seperate folder for the template in your root directory you can and just make sure your coding matches or your files won't show with your site
I have downloaded templates all the time from places and yes they are zipped files then I unzip them and start designing my site and as said upload the template file as a seperate folder. I find it easier with having things organized