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I just found this page and had to try this game again, I haven't played it for like 20 years!
Just downloaded the game and experienced same problem as you guys, but as a change I work as an IT System Engineer, and I never give up when problems occur and have a solution for you guys experiencing this
When running the Setup.exe you will have to do following:
1) Open your Task Manager
2) Goto Detailed View
3) Right Click the Setup.exe process
4) Click Analyze Waiting list (My Windows ain't English, but I guess that should be the name)
5) You will see a box with Setup.exe and some other processes below it, mark the processor below it and select "Terminate/close App, or whatever it says in English)
6) Do this again and again, until there are no more processes that are in the queue before the Setup.exe and your Installation will begin.
Edit:
After installing the game set the properties of <installationfolder>\PRG_ENG\EngRel.exe to run as Windows XP SP3 and Administrator.
Well, I hope this will come in handy for someone.
Nice times!
Chillytwix out