It installs like normal. Just put the disc in and run Naboo.exe or whatever it is off the disc. It's the one exe file on the root directory of the CD (that means immediately on the CD - not in a folder). Autorun might even popup; that'd work too.
You don't need to use compatibility mode or anything.
If you are having problems because it's 32 bit and you're trying to run it in 64 bit Windows (which SHOULD be able to run 32 bit programs) and/or Battle for Naboo is incompatible with your hardware (like when you try to play the game and it only shows a frame every now and then and the rest is black and the sound is messed up) then dual boot with Ubuntu or Linux Mint and run Battle for Naboo through WINE. That will do it.