Bob,
This component must be installed through the Joomla installer as you have already tried.
We have been having some problems with some types of servers being able to unpackage the zip file and we are still trying to point out the problem.
What operating system is your server running on?
You should not download an install WordPress themes without prior modification.
You can look at the files we have modified in the default template that ships with the component.
Some of the most important modifications that need to be made is removing the <html > , < head > , < body > tags.
Some WordPress plugins may work out of the box, but they more than likely won't. I can transfer plugins over to Joomla as they are requested. So which ones are you looking to use?
To make the WordPress component display on the frontpage you just need to edit the Menu item for Home and point it to the WordPress component.
Kindest regards,
Rafael