If you want to manually compress files, then InstallAware cannot do it for you - not sure why you asked for step by step instructions here in that case
You probably want to use a third party tool that can create self extracting EXE files, and run your setup.
Let us know if you find a third party tool with better compression rates than InstallAware!
Michael Nesmith
InstallAware Home of The Next Generation MSI Installer Get your free copy today - http://www.installaware.com/