I know this sounds like a very dumb question... I am a total beginner... I just got my very first 128x64 LCD and Arduino board today! (Worked with 8051 and 16x2 LCD before) And this is my very first comment on this forum! ;D
From ReadMe:
To install this library, just place this entire folder as a subfolder in your Arduino hardware/libraries folder.
When installed, this library should look like:
Arduino/hardware/libraries/ks0108 (this library's folder)
Arduino/hardware/libraries/ks0108/ks0108.cpp (the library implementation file)
Arduino/hardware/libraries/ks0108/ks0108.h (the library header file)
Arduino/hardware/libraries/ks0108/ks0108_Panel.h (the Panel configuration header)
Arduino/hardware/libraries/ks0108/ks0108_Arduino.h (header used to define pins for Atmega168/328)
Arduino/hardware/libraries/ks0108/ks0108_Mega.h (header used to define pins for Mega)
Arduino/hardware/libraries/ks0108/ks0108_Sanguino.h (header used to define pins for Sanguino) - untested
Arduino/hardware/libraries/ks0108/SystemFont5x7.h (definition for 5x7 system fonmt)
Arduino/hardware/libraries/ks0108/Arial14.h (the definition for 14 point Arial Font)
Arduino/hardware/libraries/ks0108/keywords.txt (the syntax coloring file)
Arduino/hardware/libraries/ks0108/examples (diectory containing the example test sketch)
Arduino/hardware/libraries/ks0108/readme.txt (this file)
However, I can't find Arduino/hardware/libraries/...
Can anyone tell me where I should place my extracted folder? 
HELP NEEDED... Thanks!
PS. I am using Arduino-0019