What you have downloaded is a disk image (CD or DVD). Use your burning SW to make a CD or DVD. Be sure to use the "burn from image" or "burn form iso" option--ie don't just copy the file to the disk.
To install, you need to create empty space on your drive. I think XP will do this, and there may be a utility as part of the SUSE installer. For starters, free up ~10GB for Linux.
Note that "free space" here means unpartitioned.