Q: What is an .MD5 file? What do you do with it?
A: MD5 is a checksum algorithm, similar to SFV that was mentioned a little while back. This one generates a much larger value and thus is more likely to be unique, but the idea is the same: go through the file, calculate a checksum, then compare it against a pre-determined value to see if the file was corrupted during transmission.

A MD5 file would contain a filename and its MD5 checksum, presumably so a program can generate its own MD5 checksum and compare against the existing result.

By itself, the .MD5 file doesn't do anything, and usually plays no role in any installation.

The program mentioned previously, hkSFV from big-o-software.com, can also generate and verify MD5 files.