I have searched the web long and hard for answers, and by stringing together bits and pieces, I finally found the answer! The Movies runs! YAAAAAY
So here I'll post the full step-by-step guide hoping that I will A - help someone else in need and B - not miss anything out.
1. Insert The Movies disc into computer. DO NOT AUTORUN or some (Library not registered) message or another error comes up.
2. Go to CD/DVD drive, right click, Open In New Window. Right click on The Movies(TM) (it’s says Windows Installer under ‘Type’) -> Properties -> Compatibility -> Tick ‘Run This Program In Compatibility Mode For’ and select ‘Previous Version Of Windows’.
3. OPTION A: There re two ways to do this bit. Either copy files onto hard drive: My Computer -> right click CD/DVD drive -> copy -> paste in Local C disc whatever. Then, go to the Setup.exe file (under ‘Type’ it says ‘Application’), right click and Run As Administrator.
(the following method is easier)
3. OPTION B: Go to CD/DVD via My Computer. Right click on it (it should show the Movies game icon) and Open In New Window. From there, simply find the Setup.exe file (it might just be ‘Setup’, type is ‘Application) and Run As Administrator.
So, two different ways of saying essentially the same thing.
4. It will ask for your key code, install, ask if you want to register, install Windows Player 9, or DirectX 9. Finished installation and makes a shortcut on desktop.
(this is the fuck-up.)
5. Double clicking the My Computer CD drive brings up a compatibility issue window – click ‘Run Program’. Then it will (probably) say: "Library not registered" or “Cannot locate The Movies(TM) CD. Please insert the CD and restart application.” So, naturally, I try the Desktop shortcut. This does more or less the same thing, even though I haven’t removed the CD after I installed the game.
THIS IS WHAT YOU DO.
6. Right click desktop shortcut. Properties -> Compatibility tab -> Select ‘Run this program in compatibility mode for:’. Now, most people advise Windows XP (Service Pack 3), failing that, Windows XP (Service Pack 2). However I got the same ‘cannot locate CD’ BS.
THEN I FOUND THE ANSWER !!!!!
Yahoo! Answers: Issues With The Movies On Windows 7
7. You must set compatibility mode to Window 98 / Windows Me, then right click shortcut and Run As Administrator.
AND THEN IT WILL RUN. At least, it did for me.
After so long, IT WORKS! I AM JOVIAL!!