Choosing taps for Linear Feedback Shift Register
The taps are decided by the polynomial in a straightforward way:
for $X^n$, you connect the $n$th tap. Note that in your diagram the first tap is $R4$, the 2nd is $R3$ etc..

Since your polynomial is $X^5+X^2+1$ the feedback is an XOR of the output of the 2nd tap ($R3$) and the 5th tap ($R0$). The "$+1$" of the polynomial ($X^0$) is usually always there and corresponds to the "feedback" itself, i.e., the line connected into the first bit ($R4$). 

The output should be the "feedback" line (rather than $R0$). This is important since the polynomial is identified with the generated sequence, and if you take the output of $R0$ you generate a different sequence, not the one identified with $X^5+X^2+1$ (although they are the same up to a prefix) 

See more details in Wikipedia: Linear feedback shift register.