The only thing I can think of is that the install program looks for the CDROM when installing, since it is the version with voices. I have the game working fine in XP with VDMSound off the CD. You could try burning the files to a CD-R and see if that works. Otherwise, you can get the floppy disk version (no voices) at:

http://www.abandonia.com

Well I tried burning it. Same damn error =/

I just dont get it. I can copy main.exe myself just the installer wont

Anyone else have any ideas? I would love to have the voices since I have never played it with such, but if I have to I'll just dl the floppy version =/

It turns out the install program looks at the CD drive with the lowest letter. If you've got 2 drives, make sure you put the CD in the one having lowest letter (2 CD/DVD drives d:\ and e:\ .... put the CD in d:\ to install). After installing, you should have 7 files in your Kyrandia folder including Main.exe and KyraCD.cfg, otherwise it won't work. I also tried copying all the files on my CDROM to my hard drive and installing from the hard drive, but no go. The Main.exe and KyraCD.cfg are missing from the game's folder...then if you try Setup.exe from this Kyrandia folder, you get that I/O error message. Hope this helps.

You are a genius my good sir!!
Tried it out and it worked. What a fickle program.

Thanks alot!!