ok let me tell the process step by step.. may be that will help
Step 1: I created a file privacy.inc.php in home directory
with this code
<?php
$smarty->assign("meta_title", Privacy Policy);
$smarty->assign("meta_description", SITE_DESCRIPTION);
$smarty->assign("meta_keywords", SITE_KEYWORDS);
?>
then I created privacy.tpl in template folder
with this code
<?
global $WS;
?>
[your html content]
its working fine for me
now yr link will be site.com/privacy.html
I ve done it like that without error, I failed to recognise that you people might not be adding privacy.inc.in file, sorry fr that