Nothing that I can think of, other than trying Windows 98 compatibility instead of XP.
Another suggestion I found said that the UAC (User Account Control) may be interfering with the installation. Uninstall the game, disable UAC, then reinstall. After reinstalling, you can turn UAC back on.
Next, go to the game's installation folder and find DFLW.exe. Set the compatibility mode for Windows 98 (not XP).
Right click DFLW.exe, and select run as administrator.
If that doesn't work, open the game CD and go to the folder called "DFLSetup folder". Find the file "binkplay.exe" and run it. It will display a window of text, when it's done, close it.
Accoding to these instructions, the game should now work properly on Windows 7. If it doesn't, there's not much else to do. There are definitely compatibility issues with it (evident from the number of results in Google for making it work with Windows 7).