You have to setup a extensionname.xml, in the root of the packed zip.
This file should look like this (if you want to run it as a Joomla 1.5 component):
http://docs.joomla.org/Components:xml_installfileIf you need to run a php file (for the table alter, and you will need one for overwriting the core files.. With the xml and file listing and the standard joomla installer you won't be happy). So just use it to start the install.extension.php and do the rest by your own script.
After description:
</description>
<installfile>install.extensionname.php</installfile>
<uninstallfile>uninstall.extensionname.php</uninstallfile>
etc.
And if you replace core files, then please make sure that you backup them (copy to a folder etc.) and restore them with the uninstall php file.
Ah the install php file has to start like this:
defined( '_JEXEC' ) or die ( 'Restricted access' );
function com_install()
{
Your code....
I hope you know what you are doing

No offense!
Remember: He first unpacks the zip to tmp then runs your install php, so you copy / alter the files at this time! And you will have to alter the tables in the PHP with a mysql query not within the install.mysql.sql! Except you wanna drop the core tables before

Best regards,
Yves