There are two ways to add it.

1) The way it is explained in csx737_manual1.pdf on page 33:

‘ADD NEW’ BUTTON

The ADD NEW button helps you to add new ‘737 Captain’ livery to FSX.HOW TO ADD NEW LIVERY?

1. Make sure FSX is not running.

2. Download and unzip new `737 Captain livery` archive to any folder.

3. Make sure all textures *.dds files, description.txt and thumbnail.jpg files are located in one
folder. NO SUBFOLDERS!
Note: If no description.txt and thumbnail.jpg files found, ACE will add default ones.

4. Start ACE: START > PROGRAMS > CAPTAIN SIM > 737 Captain > ACE.

6. Press 'ADD NEW' button.

7. Find the folder and select description.txt file. Click OPEN. You will see a window with all
information about the livery you are going to add.
Note: If no description.txt found, select any *.dds or *.txt file. In this case the livery will be added
as Unknown Free Livery. You can rename it later.

8. Press OK button. The new livery will appear in FSX under BOEING manufacturer, CAPTAIN SIM
publisher

I see that the instructions jump from #4 to #6 in the manual. So please don't tell me I'm missing some instructions!

2) Is by extracting the texture.XXX from the zip/rar file to the aircraft folder, then opening the aircraft.cfg file (with Windows Notepad) and adding the information that is usually given in the read me file that comes with the textures. The following is from the OzJet VH-OHN addon livery by Marcelovene, where the texture.OZJETVH-OBN folder is extracted to the CS_B737-200ADV and then this:

[fltsim.X]
title=CS 737-232ADV OZJET VH-OBN
sim=csx732
model=adv
panel=
sound=
texture=OZJETVH-OBN
kb_checklists=
kb_reference=
atc_id=VH-OBN
atc_heavy=0
atc_airline=OZJET
atc_flight_number=1536
ui_manufacturer=Boeing
ui_type=737-200ADV
ui_variation=OZJET VH-OBN
ui_typerole=Commercial Airliner
ui_createdby=Captain Sim
description=737 Captain (737-200ADV Expansion model) v1.1\n(c) 2012 Captain Sim www.captainsim.com

is entered into the aircraft.cfg. You will have to change [fltsim.x] to the next number in the sequence. So if I add it after [fltsim.1] I would rename it [fltsim.2]. This is how it looks in mine (the [fltsim.2] entry):

[fltsim.1]
title=CS 737-200ADV Captain Paint1
sim=csx732
model=adv
panel=
sound=
texture=klm
kb_checklists=
kb_reference=
atc_id=PH-TVX
atc_heavy=0
atc_airline=ADV
atc_flight_number=732A
ui_manufacturer=Boeing
ui_type=737-200ADV
ui_variation=KLM (Transavia Airlines)
ui_typerole=Commercial Airliner
ui_createdby=Captain Sim
description=737 Captain (737-200ADV Expansion model) v1.1\n(c) 2012 Captain Sim www.captainsim.com

[fltsim.2]
title=CS 737-232ADV OZJET VH-OBN
sim=csx732
model=adv
panel=
sound=
texture=OZJETVH-OBN
kb_checklists=
kb_reference=
atc_id=VH-OBN
atc_heavy=0
atc_airline=OZJET
atc_flight_number=1536
ui_manufacturer=Boeing
ui_type=737-200ADV
ui_variation=OZJET VH-OBN
ui_typerole=Commercial Airliner
ui_createdby=Captain Sim
description=737 Captain (737-200ADV Expansion model) v1.1\n(c) 2012 Captain Sim www.captainsim.com

It is easy once you get used to doing it. I find it easier to add manual than with ACE. Not only that, most of the free liveries are NOT set up to be added using ACE, so they have to be done manually anyway.

Mark