Fizz, you need to go to "start" on the menu bar<My Documents<EA games<The Sims 2...you should have a folder called "downloads" there along with "music" also and many more. I have the DVD version and it worked for me.
Could it be that the downloads folder is created by the registration utility that JMP fears so much? Of course the game works fine if you just create your own folder called Downloads in C:\Documents and Settings\User Name\My Documents\EA Games\The Sims 2\Downloads All downloaded files that end in the extension package (eg:- 737f2829ee8b1a62a6db29aa174c4fc9.package ) belong in the downloads folder. Apparently both Body Shop and the in game Create A Sim sort out which ones are genetics and which are clothing ...
No, the downloads folder has nothing to do with registration, since I'm not registering yet, and I can still use downloads. The downloads folder may be created the first time you attempt to use a self-extracting package, or you can always just use the tried and true method of creating it yourself.