here is part from the "README" from the mplayer source tar ball. I am wondering if I did this correctly

Unpack the codecs archives and put the contents in a directory where MPlayer
will find them. The default directory is /usr/local/lib/codecs/ (it used to be
/usr/local/lib/win32 in the past, this also works) but you can change that to
something else by using the '--with-codecsdir=DIR' option when you run
'./configure'.

I made a directory /usr/local/lib/codecs/ , then I tared extralite.tar in my home directory. then I used the command
#mv extralite /usr/local/lib/codecs/

Is that what they mean be unpack it is /usr/local/lib/codecs/ ?

well i never compiled mplayer from source so i don't know what that extralite file is, but if it does indeed contain the codecs then you are right (i guess) ...
"explanation for (i guess) :
the reason i say this is because you moved the folder with its contents to the /usr/local/lib/codecs folder....i would think that the codecs themselves would have to be in the root of the codecs folder as opposed to having a subdirectory full of them...
it may not make a difference but thats how i would have done it..