The only part of the library to really be installed is the libpq.dll library. This file should in most cases be placed in the WINNT\SYSTEM32 directory (or in WINDOWS\SYSTEM on a Windows 95/98 system). If this file is installed using a setup program, it should be installed with version checking using the VERSIONINFO resource included in the file, to ensure that a newer version of the library is not overwritten.
If you plan to do development using libpq on this machine, you will have to add the src\include and src\interfaces\libpq directories to the include path in your compilers settings.
Read the upstream documentation. For corrections, first check the current manual.