Boy its been awhile since I have but if I remember correctly I put it inline of the hotside of the hot water heater. Find an appropriate section of this part of the heater assembly and cut out the correct amount of hose, usually around 10" and just put this unit inplace of the hose, I believe it has and in and and an out port it should be labeled on the heater assembly, install it with hose clamps and your done, make sure after the install to top your cooling system off because of the extra capacity of the heater unit. Run the plugin someplace easy to get at and your done. I would suggest also going online to confirm my description and procedure here!
Good luck
KK