Hi mbonello,
.pst files are the files in which all of your personal folders are stored (i.e. e-mails, contacts, calendar, etc.), ever since Outlook 97.
Normally each user will have one .pst file (think of it as a mailbox), and the location of this file is governed by the path specified in Control Panel -> Mail -> Data Files.
So in answer to your question "How do I read a pst file in Outlook?", Outlook should be already equipped to handle these files (as it is the default file type).
However, if you are trying to import your e-mails from a .pst file (maybe from a backup?). Then you simply have to go to File -> Import and Export -> Import from another program or file -> Personal Folder File, then specify the location.
If your backup program is saying the file is corrupt, then the only thing can suggest is the Microsoft 'Inbox Repair Tool'. The following is a link to the MS support article explaining how to use it:
And finally, yes there is a program - which is free - that will read you pst files, it's called Outlook Express.....