Just place it along with the PZ3 and Poser should find it and read the morphs in it :)

You can open the PZ3 in a text editing program (I suggest Notepad++ which is free and able to handle HUGE files with no problems, unlike Notepad which may choke on a fully loaded PZ3) and look for the pmd reference there. That's where Poser EXPECTS it to be.

If you place the file where Poser will find it and resave the thing with Use External Morph Data" UNCHECKED you won't need the PMD anymore. Poser will then embed the morph deltas in the PZ3. This makes for a larger PZ3 (sometimes very very much larger) BUT it ensures that everyone who owns the correct figure will be able to open it and have the morphs working!

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You just can't put the words "Poserites" and "happy" in the same sentence - didn't you know that? LaurieA
  Using Poser since 2002. Currently at Version 11.1 - Win 10.