Aight, I saw your post yesterday and I had the same exact problem, until I tried this:
First, run the install program in dosbox. Make sure you set up your sound card while doing the install in dosbox. Test it and everything to make sure it works because you won't be able to change it later. When it works, go on to the CD-Rom test, where it locks up and doesn't run. Close DosBox.
Now go to run and type in cmd, and then run install.exe FROM THE COMMAND PROMPT. This step is important because if you just click on install.exe in windows, the install box automatically closes. When you run it, the hang up of not being able to resolve the sound card issue should be resolved because the sound blaster compatible device should be filled in already. Next, hit continue, where your CD-Rom drive should be tested. After that, you should get a dialouge saying that you've completed the installation of Emergency Room.
Finally, go into dosbox, mount your drives, and run ERI.exe and you should be golden.