So I just spent the past few hours downloading Fallout 2. Everything seems in order,
but when I hit the setup.exe, it opens a window, asks me to accept the terms and
conditions of service before installing. Ok, when I hit install, it opens up, starts to
install, then locks up and becomes unresponsive.

I try to wait it out and see if it continues to install, but it remains locked until I force
the installation closed. What's going on?

I run windows vista, and tried running as administrator, but it didn't change anything.

You have to run the installer as Administrator, as you already tried.
When it opens up, you can choose additional options.
Choose a different install location, other than in Program Files, e.g. C.\Games\Fallout 2
Before the installation starts there usually is a file verification, that checks whether the downloaded files are okay or corrupt. Does it stop there? If so they might be corrupt and re-downloading might help. If your connection is bad, try the GOG Downloader for more reliable downloads,

Also shut down any virus scanners and security suites during installation (go offline before, if you feel unsafe).
Furthermore check your hard drive for errors.

Not that I can see, no. I changed the file location, but it doesnt anything to keep the thing from locking up. I tried
the gog downloader, it kept giving me this odd error. Something about missing chunk 0 or something.. I searched
it up on the net and the only solution i was given was to keep restarting the download until it finished. Im currently
trying to redownload it without the use of the gog downloader.

It looks like it might have been an issue with the GOG downloader. I uninstalled and re-installed it. Redownloaded
the setup and ran it. Thing downloaded fast and seems to be working properly. Thanks for the suggestions. :D