We need to make sure we got these 2 software belows which plays major role.

First things first you need two bits of software

Something to extract files. Im using zip7 http://www.7-zip.org/

And a cab maker www.softpedia.com/dyn-postdownload.php its called cabpack1.4

Once you downlded the cabpack.14 software its pretty straight forward

1 First make two new folders on your desktop. call one input and the other output

2 Go to your .stp file and change the .stp to .cab. ( right click and use rename) (Example test.stp now becomes test.cab)

3 Use your extracting software and extract all files of your new .cab file to the input folder

4 Open the input folder and you will see a file called manifest.xml

5 Right click on this and use the option. open with notepad

6 Ok lots of code, but on the very top line if you scroll across to the right you will see productversion>3<productversion

7 Simply change this to productversion>4<productversion

Click save.

We just need to convert the input folder back to an .stp file

8 Open the cabpack 1.4 software

You will see source dir or file at the top of the software

9 Click the browse button to the right and choose the input folder taht you made earlier (dont choose individual files. It need to convert the entire folder)

10 In the next bar down (destination dir) choose the output folder

11 (IMPORTANT BIT!!!!!!!) Towards the bottom on the right hand side you will see (Cabinet Name template). In here we need to convert it back to an .stp file

type the name you want followed by .stp Example testtemplate.stp

Hit the ok button

you now have a .stp file that will up load and work within sharepoint 2010 list template gallery

Simply up load this to the templates section on top level site settings.

Then create a new list and choose it from the selection