I have Windows 7 but accidentally installed Photoshop 10 from disc 1 instead of using disc 2.
Should I uninstall and reinstall from disc 2?
That depends on the operating system that you have. If you need to install PSE 10 ,
On Win Xp, use Disc 1.
On Win 7, use Disc 2.
On MAC, use Disc 3.
Yes, you need to uninstall Disc 1 and then install Disc 2 or 3 accordingly.
For more details, check the below link.
http://helpx.adobe.com/photoshop-elements/kb/install-premiere-elements -photoshop-elements.html
North America
Europe, Middle East and Africa
Asia Pacific