Can the 7650 use jad files to install applications and games or does it only use sis files?

Depends what app you want to install. SIS files are symbian apps, JAD files are points for JAR files which are J2ME MIDLETS (in other words, java apps). But yes, it can use java apps, but doesn't need the JAD, just the JAR.

When you install them, the icon will go to

Settings, Apps.