I have downloaded some addons that require me to ftp the files ( which i have done) and then install the xml file from the ACP however i have no idea where this option is.
Ah sorry, I misread your original message. Are you sure the add-on is for XF2? In XF1, add-on installation was done by importing an XML file but this is no longer the case. It should simply show up on the add-ons page after uploading the files.