This solution doesn't work for me. I just purchased DOS from gog, so there is no steam related path anyway. The error message is a bit different from the OP though, but hard to copy since it's caught up in a loop (can only be stopped by task manager, very ugly). It's something about not being able to copy to restricted memory, possibly due to some bad memory. Which is nonsense: I'm installing on a relative (<1 year) new high quality SSD and have installed a lot recently w/o any problems. The game seems to run fine (at least the start), it's just the editor. My main install path for the game is C:\Spiele, so there should be no permission problem from here (Windows 7).