The /usr/src/redhat directory has SPECS, SOURCES, BUILD and RPMS subdirectories.
I copy the tarball to SOURCES as you did: cp ndiswrapper-1.16.tar.gz /usr/src/redhat/SOURCES/
Then I CD to the SPECS directory and extract the specs file:
tar xvzf ndisrapper.spec
mv ndiswrapper.spec ../SOURCES

Then I CD to the SPECS directory and use the rpmbuild command:
(first time I would install both)
cd ../SPECS
rpm -bi ndiswrapper.spec

(subsequently, after a kernel upgrade I rebuild the RPMs and just install the kernel module)
cd /usr/src/redhat/SPECS
rpm -bb ndiswrapper.spec
Now a new kernel module is in /usr/src/redhat/RPMS/<arch> where arch is the architecture of your computer.
If you have a different distro, the RPMs may be build in /usr/src/packages instead.

If ndiswrapper is already installed, you don't need to use the new ndiswrapper-<version>.rpm.
On my laptop the kernel module RPM is:
/usr/src/packages/kernel-module-ndiswrapper-2.6.13-15.8-default-1.8-1.x86_64.rpm
Lastly upgrade the kernel module.
rpm -Uhv /usr/src/packages/kernel-module-ndiswrapper-2.6.13-15.8-default-1.8-1.x86_64.rpm

Now the next time I reboot and the new kernel is loaded, I'm still online with the new ndiswrapper-kernel-module.

I did what you said and it seemed like there weren't any errors, but now what do I do? The ndiswrapper command won't work, so I can't install the windows driver.

sorry I was not around
>>ndiswrapper command won't work,
What error do you get?
What command did you use. we are not omnipotent

That's alright. Any ndiswrapper command I use (ndiswrapper -i, ndiswrapper -m, ndiswrapper -l, and just typing ndiswrapper). They all give me the same error message: bash: ndiswrapper: command not found (or something like that).

jschiwal gave you a good set of instructions.
I cannot complement this as this is a method I am not too familiar with.

I really want to see output (as root) of command
which ndiswrapper

I suggest you *follow* instructions in INSTALL
once you untared (tar -xzvf ndiswrapper-1.16.tar.gz )
to read install instructions
less ndiswrapper-1.16/INSTALL

Problems I suspect
1) You nay have not installed your kernel source
2) you have not removed all previous ndiswrapper version: this is essential

Something worth reading
Newbie's Top Ten Commands
http://www.cmm.uklinux.net/steve/ntt.html

ndiswrapper is probably installed in /usr/sbin/. I suspect that you didn't su to root first.

This is so frustrating, thanks for all the time the two of you are giving me. I have ndiswrapper-1.16 and i installed the kernel source, the exact one that matches my kernel. I followed the directions jschiwal gave me, but i don't know how to install my windows xp driver. Like i said before, i do everything in root. I first followed the directions in the INSTALL file, and as i also have said before is that i am missing an essential ".config" file that is in the prerequisites of that INSTALL file. Do either of you know what that config file is and how i can get it?

Though about the kernel source: Is there something i am supposed to do with it after i install the RPM?

I also have installed the kernel headers, am i supposed to do anything with that after installing the RPM?

Where the kernel source and headers were installed, everything is linked to where they are supposed to properly.

Finally! Disregard what i said in the last post! I am such a newb! I realized that all i needed to do was log in to root totally instead of just typing in su in the command line. It would have saved a lot of time! Ndiswrapper is working fine now! I had a few system freezes and had to restart but it finally worked. I installed the driver and did modprobe ndiswrapper and it gave me no errors. After typing ndiswrapper -l it says: wg311v2 driver present, hardware present.

NOW, i need to install wpa_supplicant. how in the world to i install that??? is there an rpm for that to make it easier??? the README file isn't very explanitory; i don't know how to set up the .config file. Thanks!

Well, I hope you learnt the lesson of doing exactly what
you are told, or posting exactly what you are doing.
Nevermind, we all learn
Is this the readme at
http://hostap.epitest.fi/wpa_supplicant/
What is not clear?

Why do you want wpa? Is wep not enough? (I mean for home usage)
I am just asking as I setup a wireless a few days ago
with wep 64 bits, ok not super strength, but it works
"out of the box"

PS: maybe wpsupplicant can be downloaded with yum

My network key for my network already established with Windows XP uses a 128 bit WEP key. I need to use something to allow connection to that and wpa_supplicant does that. I was trying to figure out how to make the config file to work with WEP, i realized i capped "wep" when it wasn't supposed to. Though what is the difference between key0 and key1 on the sample config file for static wep on that readme? All i have is one hex key.

For some reason I am having trouble with my linux all of a sudden. It keeps freezing at random times! Why is it doing that??? Does it have to do with the network stuff? But ever since i set up ndiswrapper and wpa_supplicant without connecting to a network it has been doing that. Sometimes it is at the starting up of prosesses in system startup, or it will be when I am entering something in the command line (it will start running the code but just stop and freeze without warning)

What did you do to set up the wireless network with wep?

yum doesn't work because i have no internet connection!

This will vary with distro. Just used mandriva wifi menus and
setup my router as wep 64 bits. wep is supported by most distro out of the box.
Ok wap is better than wep, 128 is better than 64. Lets start with wep

More than 1 way to do it, here is what I have after GUI typing
(replace x and y by the values you want)

# cat /etc/sysconfig/network-scripts/ifcfg-wlan0
DEVICE=wlan0
BOOTPROTO=static
IPADDR=192.168.x.y
NETMASK=255.255.255.0
NETWORK=192.168.x.0
BROADCAST=192.168.x.255
ONBOOT=no
METRIC=10
MII_NOT_SUPPORTED=yes
USERCTL=yes
WIRELESS_MODE=Auto
WIRELESS_ESSID=chooseaname
WIRELESS_ENC_KEY=inserthexakeyhere
WIRELESS_RTS=auto

>>Why is it doing that???
No idea, not good anyway/ Remove wpa and see if it persists

Ok thanks I'll try it. I don't think it is wpa_supplicant because it came with my distro. I think i remember other people saying that there's does the same thing but i can't remember the reason. I'll try your method though, thanks!

Is there a way to enable 16k stack instead of 4k stack or do I have to install a new kernel with that? I downloaded an RPM of a newer kernel with 16k stack but it said it installed successfully but didn't seem to do anyhthing. Is there a certain way I am supposed to install that? I realize this is the problem (i now remember that the problems occured withe the freezing once i installed the wireless driver and modprobed ndiswrapper).

I have read somewhere as well some stories about 16k stack
being required (was it on that topic?). It is only a question of compilation option for the kernel.
Anyway, once you have installed this extra kernel, to boot from it
you need to add grub lines in /boot/grub/menu.lst
This is the safest
(altermatively change symbolic links in /boot)

If you want to lear about linux, look in LQ bookmark for newbie
and then for rute