It seems odd that a Motorola Droid phone NOT have it under Notifications....I was bummed when I found that out.
Make sure to extract the droid.ogg sound from the attached .zip and have it somewhere on your SD card if you wish to do it completely by phone.
If you are rooted (best)
Use a file manager with root permissions (I had good luck with Root Explorer) put it in your /system/media/audio/notifications/ folder and reboot. Once you reboot it should be in the notification list.
If you do not have root
Please note you might have to reset it when you reboot because its placed on your sd card.
Place the droid.ogg file under /sdcard/audio/notifications