What a relief to finally think that I can answer one of the questions that came up on the forum and thus hopefully contribute something back.
Hot Potatoes is a separate program which is available from their website - http://hotpot.uvic.ca/. It is Open Source and free in some instances, but take a read through the licensing blurb to see whether or not you qualify.
Basically you create Hot Potatoes quizzes on your computer and then they output to and html or a SCORM zip folder. Both of these can be uploaded into Moodle. You will not automatically see the Hot Potatoes module in Moodle. It is part of the standard download, but it needs to be turned on in the Administrator settings>Modules>Activities and make sure that the eye shows as open in the Hide/Show column.
Once it is visible, you can add it as a Hot Potatoes Quiz activity into your courses (or SCORM through the SCORM module depending on how you have done your output). Note that you upload the html file rather than the .jcl etc. files. There is quite a bit about it on the forums, but feel free to ask again if I haven't been clear.