Where to install Drupal 5 Modules

Where you install Drupal modules that you download has changed since 4.7. Prior to version 5, you'd install additional modules in the Modules folder. But since version 5 came out, the new practice is to install them in your sites folder. This is also where additional themes should be installed.

This keeps all your additional modules and themes in one folder and it keeps the core modules and themes separate. Now when you need to install an additional module and/or theme, you just need to put them in the sites folder.

Now they don't go directly in the sites folder. What you need to do is create a folder called modules and place this new folder in the sites/all/ folder that Drupal has created. You should do the same for themes. Essentially you have have two additional folders that you created, modules and themes, in sites/all/

Your sites folder should now look like this:
sites/all/modules/
sites/all/themes/

By moving my additional modules in the new folders, I have had less problems with some of the modules.

Now you don't want to move the Drupal core modules in this folder. Leave those where they are. This is only for new modules or as Drupal calls them, contributed modules.

Drupal has a page on this in there handbook if you want to read more about it..