If you downloaded Custom Levelz from Paul's Gruntz Page, they are ZIPped files ... self-extracting. The ZIPped files (even correctly stored in the Custom folder under Grunt) will not show up in the Gruntz game. In the Windows environment, open the ..\Gruntz\Custom folder and look for Grunt headz ... those will be the ZIPped files. Double-click on them, and you will be presented with a Dialog Box in which you may specify what you want done (unZIP into the ..\Gruntz\Custom folder), and you will then see icons that look like a piece of paper with one corner folded, and a file extension of .wwd for each one you unZIP. When you go into the Gruntz game, and select Custom Level, you will then have a number of items from which you may select. The ZIPped file may be deleted as soon as you have verified that the Custom Level is available for play.
All of the Gruntz Custom Levelz that are not available from Paul's Gruntz Page (but only available here) are plain WWDs ready to play ... just store them into your ..\Gruntz\Custom folder.
Since I have the CD-ROM version of the game, I believe it would be best if someone who is using the RealArcade (downloaded) version of the game would answer this question. 'Tho I cannot imagine why there should be any difference between the CD and D/L versions as far as running Custom Levelz is concerned.
For the last two or three years I have been looking everywhere I could think of for a copy of the Gruntz game. I managed to find (and purchase) three copies from two different sources in Germany ... and received two copies from one company (the other never arrived from the other company). Recovering my costs for the 3 packagez + postage and handling costs (both ways) out of just two copies means that the one remaining copy of the (German) Gruntz game would cost between $17.50 (USA destinations) and at least $20.00 (Australia or Germany, for example).
Before I would spring for such an expensive game, I would try to figure out, or get help with making the RealArcade version work.