After the unlock of Windows Phone 7, Now here is a first app with name of “ChevronWP7 custom ringtone manager” which let you to install custom ringtones on your WP7 device.

Basically, it creates the XAP package compatible with Windows Phone 7 and after that a XAP application is used to deploy this package to Windows Phone 7.

Installation notes from the official site:

The applications has two components

Desktop application – used to build a custom XAP package with 5 custom ringtones you select from your computer(Required .NET 4.0 Framework)
XAP application – to be deployed to your WP7 to install custom ringtones to the system
Notes

Ringtones have to be in the WMA format at 48KHz as required by the OS. We recommend using Expression Encoder 4 (free) to transcode any MP3s.
Currently, to deploy the XAP you will have to use the Microsoft “Application Deployment” tool with the Windows Phone 7 Developer SDK. In the future, we hope to make available a standalone deployment solution for homebrew apps.

You must have an unlock Windows Phone 7 to install custom ringtones via ChevronWP7 custom ringtone manager.


How to Use ChevronWP 7 Ringtone Installer:

Step 1: Download ChevronWP7 custom ringtone manager aka Ringtone Installer.

Step 2: Run the app and select up to 5 ringtones.

Step 3: Unlock your Windows Phone 7 device with ChevronWP 7 unlocker.

Step 4: Use the “Application Deployment” tool to transfer the ringtones on WP7.

Download:

Download ChevronWP 7 Custom Ringtone Manager