available in Google's Quick View, I see that the plugin file "ShadowIlluminator.8bf" should be copied to "an appropriate location as per your host application instructions".
I don't know what they mean by "host application instructions". Host application obviously means Microsoft's Picture It! in your case, but what instructions?
That online manual does suggest running the installer, (Para 2.2 etc), that you downloaded, and then it runs a "Copy Plugin" utility in an attempt to find compatible host applications. Since Microsoft Picture It! is most likely to be in Program Files, this utility should find it.
Does Picture It! have a Plugins folder, or a Filters folder? If so, have you tried copying the file to there?
What does Picture It!'s own Help files say about installing plugins?
Mark
Does anybody know how to Plug In Shadow Illuminator to Microsoft Picture It! Photo 7.0? I downloaded the Shadow Illuminator Software, and it says to copy the plug in to the imaging application, but each time I try to save it to one of the Picture It! folders, and then reopen the application, I don't find the Shadow Illuminator tool.

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