Just download the sheep.tar file, then copy it to your N900 into /home/user (that's where you are when you open an xterm), (no unzip anywhere) then start an xterm and enter the commands in the 'code' sections from hopbeat (those you quoted)

If you copy it via mass storage the .tar file may end up in /home/user/MyDocs, if so, then do 'tar zxvf MyDocs/sheep.tar' instead of the above.

(the file should have been named .tar.gz actually, because it's a compressed tar file.. the 'z' flag to tar handles the decompression.)

EDIT: Updated a little.