Activating a mod?

I must be missing something glaringly obvious, but I see no option to activate a mod from the game top-end. I'm trying to play the Babylon 5 mod and the instructions say to choose the mod folder from the options screen, but nowhere in the options screens is there a directory or mod choice. the only mod-related option there is a tickbox to 'use mods'. Whether that's checked or unchecked I don't get the option to choose a mod, and nothing loads up when I start or restart GalCiv II.

I'm baffled!