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Thanks for reporting that. With PS, your method usually works, but it sounds like PrP doesn't like it. I'll make sure to not recommend that proceedure for PrP installations.
I've done it before with good result. The Tech Note - Troubleshoot system errors or freezes in Premiere Pro CS3 (Windows XP) advises - 8. Install Premiere Pro CS3 from the desktop. http://kb.adobe.com/selfservice/viewContent.do?externalId=kb402174&sliceId=1
But you can't just cut and paste it. Here's the drum on the instal - Install Adobe Creative Suite 3 from the desktop (Windows XP and Windows Vista)