I just did a fresh install of The Sims 2 with no custom downloaded objects etc. Since I no longer have mods installed it says not to install into the same directory as Sims 2.

By default this is where it will install it to:

C:\Program Files\EA GAMES\The Sims 2 University

But that is where The Sims 2 is installed to and it won't work. So where should I install it to then?

You need to accept all the defaults.

The original Sims 2 goes to C:\Program Files\EA Games\The Sims 2\

Okay I guess then i'm safe to install it then since I no longer have any downloaded content.