From Joomla! Documentation
Let's install a Slideshow on the front page of our Joomla 1.6
Okay, if you have used the new Joomla 1.6 yet, you know there are significant changes. To add to that, there are still not many components, templates, modules available yet for the new version. However, there are a few, one of which is a slideshow. We are going to install it on our front page here today. Ready?
We are going to use the Nivo Slider which is at Nivo Slider.
Make sure you download the correct one (1.6). Installation is a breeze, you just go to the backend, and click on Extensions and it will load the upload page. Upload the zip file, and voila! You have installed the Nivo Slider.
Now, make sure you enable the module, by default it is not enabled. Once you do this, you will click on the module to place it. This is one area that has changed a bit in Joomla 1.6, but not so much you won't be able to figure it out. You will see that now there are a lot more menu items, as you can mix and match your template items. You now click on a browse button to choose where to place the module, and you can even schedule when to start and finish the publishing of the module.
Okay, now to the module settings. You make the settings according to your folder, links, picture name, etc. and then you will see what I think is one of the cooler things introduced in 1.6, the ability to write custom css code for the module right there in a box!
Everything else is self explanatory, so upload your images to a folder, call it from the module backend, and choose which pages you want to show it on. It's really that easy.
Here is a link to a video that shows you how to do it. Video Tutorial