If you want to decode global.res, then s2rw needs to be in the same folder, so inside the locale folder for your language. For decoding you can just run the program and go from there.
For encoding, it needs to be in the Sacred 2 system folder (so I have two copies of s2rw sitting in my Sacred 2 folder). For encoding you have to use command prompt. Direct it to start in the /system folder and enter the command:
S2rw.v1.7exe globalEn_texts.txt En+
That's for English. For Italian it would look like:
S2rw.v1.7.exe globalIt_texts.txt It+
The language abbreviations are "De", "En, "Fr", "Ru", "Cz", "Pl", "It", "Hu", and "Sp".
This also assuming you didn't rename the decoded text file to something else.