please unzip the package you got from themeforest.net ONE time. You should get a folder which contains PSDs, Docs and another zip file (which is called propulsion.zip. This zip file is the right file. Go to your wordpress admin panel and navigate to Appearance > Themes. Then select the propulsion.zip file, upload & install it. You can also unpack this zip file and upload the resulting folder via ftp to wp-content/themes.
Also have a look at this tutorial video @themeforest.net: http://wiki.envato.com/buying/support-buying/solving-broken-theme-issues/
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