Firstly, you will need to install the DSL Tools before installing Power Tools v1.2.
After installing Power Tools v1.2, the Process Editor menu item can be found inside the Visual Studio development environment after connecting to the Team Foundation Server.
Visual Studio | Team | Process Editor
The user guide "PEUserGuide.doc" of Process Editor can be found under the Microsoft Team Foundation Power Tools program group. The user guide contains detailed instructions on how to use Process Editor.
Start >> Program >> Microsoft Team Foundation Power Tools >> Microsoft Visual Studio Team System Process Editor >> PEUserGuide.doc
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Martin Poon
http://msmvps.com/blogs/martinpoon