The Level Editor lets me place objects, but are invisible during gameplay!

dumb question: How do you edit the code for co's? 
PS thanks to all of you for helping a newb

You write it from scratch in World.ini.  You can put it anywhere in there as long as it's not right in the middle of an existing group.

Make your own group starting with "[Custom Object 1]" or whatever number you want (as long as it's >0 and <256) and define the variables there.  The ones you should know about:

Image=           (the name of the image, like Bottle.PNG)
Init AnimTo=     (the number of the last frame. Note that the first frame is frame 0.)
Tile Width=      (width of a frame in pixels)
Tile Height=     (height of a frame in pixels)
Init AnimSpeed=  (Higher numbers for faster speeds.)
Init AnimRepeat= (0 for infinite looping. Any other number to loop that many times.)

If you're asking how to program COs to do special stuff:  Haha, we wish.
Unfortunately, a CO is an animated graphic, and nothing more.

So what type of file should the code be? Where exactly can I write it from?

The file (world.ini) already exists.  And its location has been stated many many times.  You are just adding to that file.

And don't worry if you can't find it; there's a shortcut to reaching it.
If, in the Level Editor, you go to Level>Settings like previously stated, it will automatically open world.ini in your default text editor (most likely Notepad if you have Windows).

So let me list all the steps:
-Open your level in the KS level editor.
-Click on Level, then Settings
-In the document that opens, find a good, empty spot to add your code.
  -The first line of your code is "[Custom Object 1]" (or any number that isn't 0 and that is under 256)
  -The other line you absolutely must have is "Image=NAMEOFIMAGE.png".  Make this be the second line.
  -The rest of the code has been explained a couple of times already. (In my post here and in the guide Purple Pineapple linked to)
-Save and close.

Well alright, thats about all questions answered!! (that i cant answer myself!)

I've given up on the object that all this trouble was for, and now I'm just making a level full of British people floating around on umbrellas. Look for it in a few weeks.