This has been tested several times by myself so I'm hoping that it will work for you aswell.
First of all, if you have recently tried to install Photoshop 7, been unsuccessful and not rebooted since, then please do so as multiple setup services may conflict.
Please copy the installation files to a folder on your hard drive (meaning do not run setup from a CD).
Open up the installation folder and search for "Setup.exe":
Right click on "Setup.exe" and select "Properties", putting ticks in the following:
"Run this program in compatability mode for" ensuring that "Windows XP SP2 is selected, and also tick: "Run this program as an Administrator", then Apply the settings you have just chosen.
Now run "Setup.exe", again, the installation will appear to fail at 99% with the installation dissapearing but it hasn't stopped at all!
Do not attempt to try another reinstall, just do nothing! There are installation services working in the background still so you may hear a little extra hard drive noise than normal.
Amazingly after approximately 1 hour setup continues as normal and installs fine!
I hope this post helps someone.
