Sorry I missed your post before.
Oops, I never realized that this could be unclear

.
The Stereo Tool stand alone version continuously processes input from your sound card, and plays it back. If you want to process an MP3 file, you'll need to use a plugin version of Stereo Tool - eg. the Winamp plugin version for programs such as Winamp, AIM, MediaMonkey etc., or the VST version for a VST host.
So,
- Install Winamp, AIM, MediaMonkey or another Winamp plugin capable player
- Install Stereo Tool's Winamp plugin into that program (Easiest for Winamp itself)
- Then in Winamp open your MP3, and under 'output plugins' configure the output (you can use an MP3 writing output plugin here).