If this install is a re-install, you're going to have to uninstall the old version first.

1. Move all your non-default routes, trainsets and consists away from your MSTS\Routes folder BEFORE uninstalling. Leaving them in the \Routes subfolder and re-installing MSTS seems to corrupt non-default routes (you end up with tracks and objects, but no terrain at least or an unusable route at worst, plus there are missing .S files in some of your trainsets);
2. Uninstall MSTS via "Add/Remove Programs" in Control Panel;
3. Use Explorer to delete any residual MSTS folders (anything you've added to the installation needs to be manually deleted). These steps should clear the registry as well as the hard drive.

This is the default UAC (User Account Control) setting in Windows 10: you don't need to touch it.

It does have a nuisance component, though, so I usually turn it down one step as shown in image below:

To step it down, press Start | All Apps | Windows System | Control Panel | System and Security | Seciurity and Maintenance | Change User Account Control Settings and move slider down one step and click "Ok".

Right, now we're good to go.

When you first insert your CD into the drive, Windows will ask you to select what to do in a pop-up in the lower right corner of your screen:

Click on that pop-up and select "Open folder to view files":

When the folder opens, RIGHT-CLICK on setup.exe and select "Run As Administrator":

Windows will try to install MSTS in its default folder,
C:\Program Files\Microsoft Games\Train Simulator in 32-bit systems or
C:\Program Files (x86)\Microsoft Games\Train Simulator in Windows 64-bit systems.

DO *NOT* INSTALL MSTS TO THE SUGGESTED DEFAULT FOLDER

Stay out of the Program Files folder altogether: install MSTS to another folder, say, C:\1MSTS or even another drive, for example X:\1MSTS where X: is your target drive (local or external)- naming the folder thus will cause it to rise to the top of your folder listing in Explorer and is a lot easier to type into "Save" dialogues.

Windows 10 thinks it's "protecting" (but it interferes with the modification and installation of) files in the Program Files folder, often leading to errors with batch files running and activities unpacking. Installing MSTS outside "Program Files" also makes it much easier to move or access MSTS files across your wired or wireless network.

The following images show you the way:

1. Click on "Install"

   

    

2. Click on Right-Arrow

   

    

3. Adobe Acrobat on the MSTS disk is about version 4: with a Win10 machine, you'll most likely have Adobe Reader 10 or higher, so skip this step (ie say "no")

   

    

4. Click on the radio button labelled "Customize Installation Options" (1) then click on right-arrow (2):

   

    

5. Click the "Complete Install" radio button (1) , then "Change" (2) then Right-Arrow (3)

   

    

6. Select the drive you wish to use, then type in the name of the folder you wish to install to (here I've chosen "1MSTS" as my install folder).......

   

    

7. ..... and I've promptly made a mistake: you must type drive and folder in the field for the path to the program:

   

    

8. Go back and make sure the path reads drive AND folder as below:

   

    

9. If the folder doesn't exist, you'll be asked to ok its creation:

   

    

10. Check that everything is now as you've selected and click on the right-arrow to commence the actual installation:

    

     

11. The program creates the necessary folders...................

    

     

12. ..... and then starts the installation proper, a locomotive travelling slowly across the tracks to mark progress:

    

     

13. At 29%, you'll be prompted to insert CD2: do so, wait till the CD drive spins up, then press OK. Installation proceeds:

    

     

14. Installation proceeds......

    

     

15. ....and completes.

    

     

16. Now restart your computer as instructed:

    

     

17. You will have an MSTS icon on your desktop, thus:

    

     

18. If you click Start | All Apps | Microsoft Games |Programs | Microsoft Games , you will see that the "Editors and Tools" icon is also present (new users continually post "I don't have a link to the Tools!" Yes, you do!):

    

     

19. I prefer to move my commonly used icons to the Start menu: right click on Train Simulator and select "Pin to Start". Repeat for the Editor and Tools app:

    

    I then create a "New Group" entitled MSTS and move the two icons there, thus:

    

     

Right, that takes care of the basic installation. Now it's on to the upgrades and enhancements.

Don't start MSTS just yet.

Rename Uninstal.exe to MSTS_Uninstal.exe .  Do this now BEFORE installing anything else (after the updates). This is because there are several incompetently prepared installers of downloadable models out there:  one of the most common errors in these installers is to include an uninstal.exe file and install it into your MSTS folder, overwriting the default uninstal.exe.  This step protects you from this eventuality.

(If you need to uninstall MSTS, delete any rogue Uninstal.exe and rename MSTS_Uninstal.exe back to Uninstal.exe: you can then uninstall by double-clicking on the Uninstal.exe file or via "Add/Remove Programs" in Control Panel).

Now before you put away your MSTS disks, browse to the Techdocs folder on CD1

and run Techdocs.exe,

unzipping all files into a Techdocs folder in your MSTS installation.

You now have all of the MSTS reference files close at hand.

Make a copy of your "Global" folder: click on the folder name and Click Copy then Paste.

Now you have a "Global - Copy" folder: if worst comes to worst, this can be used to bring your Global folder back to an installation default.

Get rid of the startup sound and image .mpg: it slows down program loading; the presence of this start-up video file is also responsible for many "Keyboard Stops Responding" errors, so eliminating it from start-up removes another source of error.

In Explorer, browse to your MSTS\Global\folder : rename startup.mpg to startup.mpg.old ; you can even delete it without any ill-effects on your MSTS installation.

Let's just take a minute to make sure that the MSTS folder is set to read/write.

1. Click on "Computer" (or open Explorer). Browse to your MSTS folder. Right-click and select "Properties". Under "Attributes", it's probably set to "Read-Only".

   

2. (If it's not set to read-only, select read-only and click "apply".)
    
3. Either way, the MSTS folder is now set to read-only. Now unselect "read-only" and click "ok".

   Select "Apply changes to this folder subfolders and files"; Click "Ok".

   

Windows will now run through the folder, removing the read-only attribute on all files and folders.



4. The folder is now set to Read/Write ensuring that you will be able to save activities and other changes to your game in the sim, Route Editor or Activity Editor.
5. Finally, you need to set both train.exe and launcher.exe to "Run As Administrator".

   Open Explorer and browse to your MSTS installation. Right-click on "train.exe", left-click on "Compatibility" and check "Run As Administrator". Click "Ok"

   

Repeat for "launcher.exe". Right-click on "launcher.exe", left-click on "Compatibility" and check "Run As Administrator". Click "Ok"

I was pleasantly surprised at how trouble-free the installation went, always expecting that Microsoft will go out of their way to make things "difficult". Certainly in this case, the process was smoothly undertaken.

Your MSTS is now installed and error-free as far as the original installation goes.

Of course, from here you have thousands of locomotives, routes and other add-ons to enhance your simulation experience.

Enjoy.