Suggest you do it this way:

Follow the instructions to extract the files from the .gz but do BOTH
into the same directory structure. Then create the table of contents
and try the install again. In other words:

cd /usr/sys/inst.images
gzip -d -c 520506.v1.tar.gz | tar -xvf -
gzip -d -c 520506.v2.tar.gz | tar -xvf -
inutoc /usr/sys/inst.images
installp -acgXd /usr/sys/inst.images bos.rte.install
smit update_all

When asked for the input device, type in: /usr/sys/inst.images

If done right, the inutoc should have created a table of contents file
(.toc) that contains a list of filesets available from BOTH tar.gz
files. Now you just install the one time and you won't be missing any
pre-requisites.

HTH.

Steve