I too had the exact error.... unfortunatly after 4 hours of trying everything that they suggest at the main Sims2 site.......I ended up taking the game back and exchanging it.... You can definatly tell if the CD is corupt if it will not let you copy and paste the contents onto your harddrive.......( acording to EA Gamnes)
Once I had a new one.... it installed perfectly.....
Many times when they mass produce....well there can be alot of corupt CDs out there.....
But try what they suggest at the site... might help