General What files to modify? How do the template files interact??

Ok, I have read quite a few posts on this board and many have been very helpful for what to do at certain points in the website creation process.

BUT, although I am fairly familar with computers and Photoshop, HTML, etc. I still have not begun to modify the template I purchased because I am not sure what portion I should be modifying.

I have a set of .psd files along with a "clipart_library" directory, a "fonts" directory and an "index.html" file. I can easily modify and customize the .psd files to reflect my own site's information, but after I modify these files, what do I do??

How does the site reference these files? How do the buttons work and link to additional pages?

I know there are people on here that know MUCH more than I do regarding this web stuff, so if there are a set of instructions out there that apply to my specific questions please advise. Or if anyone knows what files I am to modify and then what exactly to do with them after I modify them to get them to work I would appreciate it.

I have web hosting with a built in upload program for my site, so I dont need to FTP the files (I dont think). I have already tested this by uploading all of the files to the software and my website worked, but it was just the template, so I need to know which of the files to modify.

Thanks!