Well firstly rt2870sta kernel modules built into the 2.6.30+ kernel. Why are you trying to build them?
So that point aside, you say you untar a tar.bz2 which creates "ABC" a directory - and "ls" reveals it is created; then you try and CD ["cd" should not be capitalized case is relative to linux] to that directory - then 'The full path is user/downloads.ABC' [I am guessing the full path is actually /home/user/Downloads/ABC - again, case is relative the "Downloads" directory is usually capitalized in most distros and you use a period instead of a forward slash] to get to a second tarball this one is gzipped. It doesn't sound like you got to the second tarball. I am guessing you are following a recipe from somewhere and you haven't quite got there yet to get to the point of compiling.
Also, "Makefile" isn't a command "make" is and if you aren't in the correct directory where the "Makefile" resides which contains the instructions to "make" a binary - it will of course not know what to do.
I would recommend you read up on the basics first ( http://www.rivetserv.net/
or tldp.org ) before you attempt to build something as complicated as a kernel module and that you check if you even NEED to build a kernel module (once your wireless USB device is plugged in first run "lsmod" to see if it has inserted the rt2870sta module then run "dmesg | tail" to see if the kernel has recognized the hardware on that link I posted earlier there is a quick rundown on how to troubleshoot wireless on the second page).
If you are trying to use a patched version of the module from somewhere for some enhanced use make sure that it is compatible with the kernel first. Problems with the rt2870sta modules are usually related to the firmware not being available not the module not being inserted.