You could try right-clicking the Setup file --> Properties --> Compatibility tab --> Choose Windows XP or 2000 from the dropdown box and OK it.
You could also try copying the contents of the CD's to a folder on your hard drive and installing from there.
According to
***this***, a Werfault error can be caused by a virus.
According to
***this*** it can be caused by a bad disc.
There is more about WerFault (WER = Windows Error Reporting)
***here***You can turn Windows Error Reporting off if you want, though I don't know if that would fix your Setup unless Windows Error Reporting is conflicting with the game somehow.
Control Panel > System and Maintenance > Problem Reports and Solutions > Change settings > Advanced settings
From here you can turn the feature on and off.
Another page that describes how to turn it off is
***here***.