How do I enable extension installation?

I installed Firefox rc3, and it wants to update a bunch extensions. I
try to do that, but it tells me 
"Software installation is currently disabled. Click Edit Options... to
enable it and try again."
I click Edit Options..., and it opens my Preferences... panel, but
nothing I do makes any difference. I've read all the FAQs and sup****t
boards and can't find anything that addresses this. The closest thing I
can find is an option "Warn me when web sites try to install extensions
or themes", but I even have unclicked that and it doesn't matter.
This still happens when I download the .xpi file and drag it onto the
open browser window.

Where is the option to enable enable software installation?