In your KHFM Randomizer Software folder, find "seed_generator.exe" and open it.
Once open, you'll find the following window prompting you to point out your settings file (if you don't have a settings file, read Creating Settings) and your Archipelago installation folder.
Choose your Archipelago installation directory. Usually this is "C:\\ProgramData\Archipelago".
Choose your settings file, usually inside the "/Settings/" folder.
You're also prompted to decide whether to replace the "apworld", which is the file which controls how Archipelago knows to generate KH1 seeds.
You can use this to ensure that your installed KH1 "apworld" matches the one your KHFM Randomizer Software version is expecting. If you aren't sure, leave this as "Yes".
Click "Start".
After some time, you should see a window like the following:
Additionally, you should see a file in the "/Files/" folder called "AP_.zip". This is your newly generated seed.
Extract this zip file. I usually extract it to a folder with the same name.
Inside you'll find the following:
A ".archipelago" file which will open a server locally if you chose to have remote items.
A ".txt" file containing the spoiler log for the generated seed.
A ".zip" file for each player containing the necessary json data for generating that player's mod in OpenKH, which is used during "Generating your mod zip".