I found a couple of threads on this isssue but seems no one has found a solution of the setup.exe being an invalied win32 application. I am running Windows 7 64 bit.
I already tried running it in different compatibility modes with the same error.
I thought of running windows xp virtual PC and installing it there, but if it worked then it would be using a virtual graphics display driver and I do not think the game would work great under that, if at all.
I had the same exact issue. I googled and downloaded "7 zip", then extracted the file with that program. I was able to install the game and was playing 10 minutes later.
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