What you've done works...

The hips.tar.gz file is set up that you would do the following:

cd /
sudo tar zxvf hips.tar.gz

This would end up with the NorderX directories in the /usr/share/kstars/HIPS folder, which is a more standard location for the kstars systemwide (in that they're available read-only for all users on a system, rather than having them in your home folder.
Then you would just point kstars to look at the /usr/share/kstars/HIPS in the dialog that you screenshotted.

You don't have to change what you've done, I'm just explaining why they have the /usr/share/kstars path prefix in the tar file.

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