Well from the above you have indeed installed it wrong. As this;
I copied template.php into forum1/admin/em_includes
is wrong the 'template.php' file should go in 'includes/' and the 'includes' dir is the one in the root of the forum NOT the easymod one.
The easiest way to explain how to install this mod is as follows;
- download the zip file 'xs_mod.231.zip'
- unzip it, making sure to preserve the dir structure within the archive
- you will then end up with a 'xs_mod.231' dir and this dir will have the following contents;
obviously the contents of the individual dirs are not shown for simplicities sake.
Now all you do is connect to the server where your forum is and in the right window (the remote server) navigate to the root of your forum (where config.php, index.php etc are). In the left window navigate to where you unzipped the XS Mod archive and enter the 'root' dir so you see the dirs;
select all the dirs and upload them to the remote server. The dirs 'admin', 'includes' and 'language' already exist in a phpBB installation so all your doing is uploading the contents of those dirs and as those files don't exist you won't be asked if you want to over write them apart from 'includes/template.php' which does already exist and should be over written with the one from XS Mod.
Once installed the only difference you will see in the root of the forum is the extra dir 'xs_mod'.
Visit the ACP on your forum and if you see 'eXtreme Styles' on the left menu then the mod is installed.