I must see a dozen posts per month asking about using KindleGen. Here's how to use it although I highly recommend just dragging and dropping your book file onto Previewer's face instead. (You can also drag and drop your file onto "kindlegen.exe" to convert it.)
1) Download the kindlegen_win32_v2_8.zip file to your desktop. You can find it here:
2) Open your C-drive directory. The easiest way to get to your C-drive is to double click on Computer on your desktop (or My Computer if you're using an OS older than Windows 7.)
You'll see other folders in there such as Program Files, Users, Windows etc. Make a new folder in this directory and call it KindleGen.
3) Shrink the C-drive window down and go back to the zip file on your desktop and double click to open it. (There's no need to extract it.)
4) Copy the file in there called: kindlegen.exe and paste it into that new KindleGen folder we just made in the C-drive directory. While you're still in the new KindleGen folder, make another folder inside it called: Book
5) So now you have a KindleGen folder on your C-drive and inside is the kindlegen.exe file and the Book folder. Find an HTML, ePub, or OPF file that you wish to convert into a Mobi book and paste it into that Book folder. Of course, if it's an OPF file you're pasting, then you'll also need all the other folders and files that go with the making of the book such as the NCX, ALL HTML files, all images, any embedded fonts etc.
6) Go to All Programs\Accessories and open Command Prompt.
7) Copy the following and then right-click beside the cursor in Command Prompt and paste it in. (Control V doesn't work in Windows 7.) Make sure to change "your_book" to whatever the name of the file is you have in the Book folder along with the correct suffix (epub, opf, or html.):
8) Hit the Enter button on your keyboard. KindleGen will convert the book and place the new Mobi file inside the Book folder.
9) KindleGen will use the standard c1 compression unless you tell it otherwise. The other choices are c0 (no compression) or c2 (the most compression.) To use c0 or c2, paste in one of the following:
C:\KindleGen\kindlegen.exe -c0 C:\KindleGen\Book\your_book.epub
C:\KindleGen\kindlegen.exe -c2 C:\KindleGen\Book\your_book.epub
The other commands available through KindleGen simply aren't worth messing with because you can do them better and easier without KindleGen. For instance, you can force KG to change all your jpg images to gif. Or you can force it to give a new name to the Mobi file it outputs. And honestly, the three compression schemes produce files that aren't very different in size at all. It might be worth using c2 compression once in a great while if you have a large book that's just barely over (let's say) 2MB in size and you'd like to keep it under 2MB in order to avoid an extra 15-cents in Amazon's delivery fees.
And obviously you can name your Book and KindleGen folders something else and put them somewhere other than the C-drive once you have this directory stuff down. You can also delete the zip file now and all the files inside it. They're all useless except for the kindlegen.exe file that we already copied.
That's about it. Now really, isn't it a lot easier just to drag and drop the file you want to convert onto Previewer?