The root of your card means its main directory, the one you first see when you explore it. Now if you don't know what a directory is, it's back to computer basics 101 for you...
Your nds files are probably not winrar, as you say. More than likely, you're just confused because the icon displayed is not what you're expecting, or they are actually still in an archive. To make things easier for you, try to show the file extensions in windows. Then you'll know exactly what is what just by looking at the file extension (the 3 caracters after the .) In Windows XP, while viewing a directory, click:
Tools > Folder Options > View. Then remove the check mark on the option "Hide extensions for known file types". Apply, OK, OK. And you're done.
On other Windows, I'm sure it's very similar. Try to figure it out. Folder Options are also in the Control Panel.
About your main question, make sure you have a real R4 card first, before trying to install Wood on it. Remember a real R4 cannot use a SDHC card (anything bigger than 2GB).
Good luck!