Copy the wpseo-news directory to your plugins directory and activate the plugin on the plugins tab. Make sure you have the WordPress SEO Plugin active and have enabled XML Sitemaps, otherwise it won't work. Then configure it further using the options.
Note: the XML sitemap it creates will be news-sitemap.xml, a previous version of this script used news_sitemap.xml (with an underscore instead of a dash), but doing it this way means we have to register one rewrite less, which is good for performance.