The package includes installation instuctions. They are reproduces below:

 

This is the same concept as the HTML nugget but for PHP. It only accept PHP, no
HTML, that is a possible extension. Most hardcore PHP'ers could just modify the
template but this allows you to use Serendipity's pretty block manager.

1) Extract this plugin in the serendipity plugins directory.

2) Apply the included patch file (serendipity_admin_plugins.inc.php.diff)
using the patch command to /serendipity_admin_plugins.inc.php

e.g.

cd ~/www/blog/plugins
tar zxvf serendipity_plugin_phpnugget.tar.gz
cd ..
patch < plugins/serendipity_plugin_phpnugget/serendipity_admin_plugins.inc.php.diff
(if prompted above just press 'y')

Then you are done. :)

UPDATE: I submitted the plugin to the serendipity developers and recieved this reply. I also modified the plugin to not be stupid. Basically I will use this as a testing plugin, before I make a more maintanable specific plugin.

Hi Dominic!                                                                    
                                                                               
Thanks a lot for your contribution; your blog looks quite cool, BTW. :)        
                                                                               
But regarding your plugin - this was once discussed on the forum at            
http://www.s9y.org/forums/viewtopic.php?t=148 and                              
http://www.s9y.org/forums/viewtopic.php?t=219.                            
                                                                               
The bottom line is, that we (I) don't like to encourage the use of a PHP       
plugin.                                                                        
This is quite nasty on multi-user installations and since eval() is the core of
all evil in this world, I really want to get the users into creating easy      
plugins  instead of generic ones.                                              
                                                                               
However your patch (which, BTW, was made against the wrong file so it removes  
the lines which should really be added) inspired me to add the 'text' type to  
current CVS. :)                                                                
                                                                               
Best regards,                                                                  
Garvin