In order to edit the New Products area, you need to go to the Admin area and then to the Configuration >> Max / Min Values module and set the values for the maximum / minimum New Products that you want displayed.  To verify that you have changed and submitted your updates correctly, just click the "catalog" link at the top of your admin area.  The "catalog" link is the "view  store" option for osCommerce.

For the image files, the mm denotes the main zip file with all the full size images in it. mm_new_products denotes only the images of the new products that have been added to the inventory. mm_thumbnails is the zip file with all the thumbnail sized images in it.  mm_new_products is a subset of mm.