I don't have any problems running the game itself. Is it possible your copy of Alone in the Dark is corrupted or changed?
I don't have a separate "install.exe" or "setup.exe" however. I run the game using "alone.com", which prompts me for configuration information if necessary, then executes "tatou.com."
Here's my MD5 hashes for the two executables
ALONE.COM 789 bytes :
MD5: AD4B6E647E2B89B6A0A97C00C4735213
SHA1: D53DF69386E30B70BF59425F5A93F4B42039F35D
RIPEMD: AFB3E987774B049CB88458F8D47F3739996FC6F1
TATOU.COM 3,616 bytes :
MD5: 818DC5DD7648CEADF554979BF6534F55
SHA1: 5B2725F65FD2F59B19EB2775EC31ABFEFA7DE581
RIPEMD: D3A7FEA87E7B395B84C81859E22C29011D70CDB5
Now I'm not positive what the status of my Alone in the Dark is. I own a copy of it, but I think this might have been one I grabbed off an abandonware site. (Sorry, just being honest.) Our hashes may differ simply because of that. However, they might also be different because of corruption.
I used SecEx MD5+ to generate the hashes. It's free, easy to use, and has shell integration along with automatic output to a file. You can grab it from the links below. I'd recommend having it if you've ever been concerned with the integrity of your files.
While the DOS programmers of old were good, I rather doubt that the entire game is in 4K of code, so it stands to reason that other hashes may be needed. However, if the installation procedure is what's giving you trouble that should give us a good start.
SecEx MD5+ Download
http://www.bytefusion.com/download/bin/secexmd5setup.exe
SecEx MD5+ Download Page
http://www.bytefusion.com/download/winxp/middle.htm