If you downloaded the new firefox 1.5, I doubt that it has that Firefox-installer file there!
What you can do is move the extracted folder to /opt/
Then the Firefox folder will look like this -- /opt/firefox.
Right click on the K-Menu --Edit.
Then add a new item to the Internet section, lets say Mozilla Firefox 1.5
Then under the Workpath -- /opt/firefox/firefox should do the job.
If you put it in your /home/<yourname> folder, then the Firefox will be installed only for you!
Another method would be executing the firefox.sh file from the shell..
You can also use firefox.deb package, since you are using MEPIS.
You see, linux provides so many options!