Once you have the .zip, extract it on the deployed machine to whichever directory you like. I personally deploy these projects underneath <WFInstall>/WorkflowDeploy/Release, just like a local deployment would do. If you deploy your flow here, all the directory permissions should be good.
One thing this deployment option doesn't do, however, is configure the site in IIS (Publish Project and Create Publishing Installer will). Once you have the .zip extracted on the target machine, create a virtual directory (I usually keep the VD name the same as my project name) at the DefaultWebSite pointed to the directory where you extracted the .zip.
That should be all there is to it.