What is the 3rd party software installation procedure

Hi,
I am new to mac, so this may be a basic question. Third party software installation files usually have the dmg extension. What is the procedure to install apps that come in this form? I know that once I double click the dmg file, a virtual disk appears on the desktop. Can I copy the disk to the applications folder and delete the dmg file? Actually I have tried to do this and mac wont allow me to delete the dmg file beyond trash. What is the procedure that should be followed?
I also realize that my understanding of this disk image and disk utility concepts is weak. If you can, please explain these terms too.
Thanks.
Regards,
Murali
MacBook   Mac OS X (10.4.6)  

What you've done is copied the .dmg to your applications folder, not the application itself.
a .dmg file is a 'disk image' which will mount a 'virtual disk' when double-clicked. A virtual disk behaves as though it was a real physical disk - even though it's all software.
In your case the virtual disk contains the Firefox application. The window you posted on Flickr is the contents of this virtual disk - with a useful (or confusing) diagram telling you to drag the application to your Applications folder.
Since you've put Firefox into your dock without first copying it to your Applications folder, OSX is running it from the virtual disk, not from your real disk.
When running 3rd party applications normally, you shouldn't need to have any virtual disks on your desktop.
What you need to do is this:
-Take Firefox out of your dock
-find the .dmg file you downloaded and double click it to mount the virtual disk
-drag the Firefox application (.app file) into your Applications folder
-drag the virtual disk to the trash to unmount it
-drag the .dmg file to the trash to delete it
-put Firefox back in your dock, from your Applications folder
Hey Presto
PowerBook G4 1Ghz 15   Mac OS X (10.4.1)  

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