It sounds like there are two intended use cases for ad-hoc distribution: getting your app in the hands of beta testers and allowing organizations to create apps for internal use. Of course, with only 100 copies of an app, ad-hoc distribution is not well-suited for enterprise apps with wide appeal. (For organizations with 500 or more employees, Apple offers the iPhone Developer Enterprise Program, which appears to allow for unlimited ad-hoc distributions, but there are more hoops to jump through).
A useful resource for the ad-hoc distribution process is Publishing Applications for Testing in the iPhone Development Guide; it provides an overview but is light on detail. The best step-by-step instructions for ad-hoc distribution are on the iPhone Provisioning Portal. These instructions leave you hanging, however, at the point where you've generated your app files.
Both the provisioning file (the file with the .mobileprovision extension created when following the instructions on the portal) and the app need to be sent out to testers. Note that the app is actually a folder containing many files; before it can be attached to an email it either needs to be compressed or included in a compressed file along with the provisioning file. If you're sending your testers Apple's Instructions For Application Testers, use a single archive file to be consistent with the instructions.

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