If you are experiencing issues installing the game from the disc, please follow these instructions to force the game to install from the discs.
If that does not work, try renaming your Clientregistry.blob.
Installing from Disc instead of Steam
1.Close Steam (File > Exit).
2. Go to the Start button and select Run (XP) or type Run in the Search box and choose Run from the list (Vista).
3. In the Run window type:
"C:\Program Files\Steam\Steam.exe" -install E:
Replace E: with the CD/DVD drive you are installing from if is not correct.
Replace C:\Program Files\Steam if your Steam installation is not in the default location.
4. Press OK. Your installation should continue from the disc.
ClientRegistry.blob
Certain Steam issues may be corrected by renaming the ClientRegistry.blob and restarting Steam.
1) Completely exit from the Steam client.
2) Go to C:\Program Files\Steam (or the Steam directory that was specified during installation).
3) Locate ClientRegistry.blob and rename this file to ClientRegistryOld.blob.
4) Restart Steam to allow the file to be recreated.
5) Test the issue once more.