Sedona is a neighborhood template just like Bluewater. Once you have put it into the correct place in your Sims 2 program files, you can add it to your game just like a Maxis template. The only wrinkle is that you need Marvin Kosh's hack to suppress that big Bluewater icon so that you can physically click on the word Sedona.
The other two folders go in your Downloads folder ..... My Documents\EA games\The sims 2\Downloads. SedonaDownloads contains some "body" files for the sims and SedonaDownloads-hack contains Marvin Kosh's hack to supress the big Bluewater button so you can get to Sedona. It's a very small hack and I've kept it in a folder of it's own so you can easily see that it's a hack.
Start your game and go into a neighbourhood. Click on the shopping district icon to add a shopping district and you'll see Sedona as one of the options. Click on Sedona and it will be added to your hood. If you just want to try Sedona out, start a new neighbourhood and add Sedona to it. When you are done testing, delete the whole neighbourhood.
There are pictures and albums for the 3 Sedona families and you should find them in your game when you visit Sedona. I also wrote a story for Sedona, but it doesn't install itself into your game as it should. I think it's a maxis problem as it happens to Bluewater as well in my game. The Sedona album ishere or on mysimpage
If you want the Sedona album and pics in your game, you need to transfer the pics from the template to your 'hood storytelling folder and fix the album yourself. The pictures are easily transferred. Open the storytelling folder in the Sedona template and also open the one for the hood you've just added it to. Copy all the snapshots and thumbnails numbered something_00000004_xxxxxxxx.jpg from B003 to your 'hood storytelling. The Sedona album is a little trickier. First, find the neighbourhood story for the new Sedona subhood in your game. It will be the new .xml file with lots of zeros in the name. If it doesn't exist you'll need to make a 'hood album for Sedona in game. You need to keep the name and framework of this file, but replace any photo's and text in it with mine. You can open .xml files in Wordpad (or Notepad if they are small) Open the target file and delete any junk pictures and text - from the first<entry> to the last </Entry> (about 10 rows from the end). Leave a space. Then open up the Sedona album in the template folder webentry_00000004.xml. Copy all the entries (from the first <Entry> to the last </Entry> inclusive) and paste them into your new album into the gap you just made. That should give you a working album for Sedona with all my pics and text.