Because of sh404SEF doesnt offer any user interface for managing extensions except standart extentions you need to change the parameters from codes.

In ReadMe.txt file you have copied and pasted some codes like these:

/* Zoo */
var $shInsertZooName = true;
var $shZooInsertItemId = false;
/* integer, if 0, no categories will be inserted in URL for a product
if 1, only 'last' category will be inserted in URL
if 2, all nested categories will be inserted in URL */
var $shZooInsertCategories = 2;
/* boolean, if true, category id will be prepended to category name */
var $shZooInsertCategoryId = false;

These are the parameters that you can change for your URLs.