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If you run the converter program it is self explanitory. Choose your source
files, choose your destination, a couple of options (you can get information
on these options in the help) and let it convert.
There is an readme on the page where you downloaded both of those files: http://www.adobe.com/support/downloads/detail.jsp?ftpID=3820
I recommend to use the latest converter available (currently 4.3.1) and the latest version of camera raw that your version of Photoshop can use (3.7 in your case) http://www.adobe.com/support/downloads/detail.jsp?ftpID=3584
Read carefully the instructions here (found on the download page: http://www.adobe.com/special/photoshop/camera_raw/camera_raw_3_7_readme.pdf as for what to do (where to install camera raw)
I've placed my photo in the source box, I selected my destination file, I pressed convert, it keeps coming back saying it can not parse it! Whats that mean?
I'm on a mac, i'm shooting a Nikon D40x, the file is a NEF file.
William, are you using the latest version of the DNG converter, that I linked to?
Also, the converter works with folders, as indicated in the readme I took the time to point to. Individual files work only by drag-and-drop.
Why would I want to update when it says DNG 3.7 is what works with CS2? Are you saying that the 4.3.1 is better? My Nikon D40x is on the list of cameras in the 3.7 program, so what would be different?
"Why would I want to update when it says DNG 3.7 is what works with CS2?"
DNG Converter != Camera Raw. You are confusing the two.
You want Camera Raw 3.7 for use with CS2.
"My Nikon D40x is on the list of cameras in the 3.7 program, so what would be different?"
No, the D40x is NOT on the list of cameras supported by 3.7. Support was not added until Camera Raw 4.1 and DNG Converter 4.1.
You always want to use the most recent version of the DNG Converter, which is currently 4.3.1. Is is a stand alone program. It does not require any version of any Adobe software to be installed.
You always want to use the latest version of the DNG converter. It supports the most cameras, and it is the latest version which may have other small undocumented improvements in it. The DNG files that it creates are compatible with any version of ACR from version 2.4 onward.