All the copying needs to be done on the PC.
1. Remove the HD from the PS2 and connect to the PC.
Note* The HD will be set as "master" so make sure you connect to the right cable.
2. First burn the image to a disk or load the image to a virtual cd drive.
3. Install the disk to the PS2 HD using WinHIIP http://www.psxforum.com/forums/download.php?id=2539.
4. Replace the HD into the PS2 and away you go.