You can not open .ips files in Lunar Magic, you have to patch the .ips patch to a .smc file.
First of all, make sure you have a clean Super Mario World rom. I can not link you to one here, you're going to have to find one yourself.
When you succesfully downloaded a clean SMW rom, download Lunar IPS
. This tool allows you to apply the .ips files to your clean SMW rom.
Once you downloaded the zip file, open it up. You'll see a file called Lunar IPS.
The following window pops up
Select "Apply IPS Patch" and browse for your .ips file.
Once you found it, open it. It will now ask you to browse for a clean rom. (.smc)
Once again, when found, open the file.
Congratulations! The file has been patched and you can now open the .smc file in Lunar Magic!