Lol this is what you gotta doo. I had the exact same problem. And FINALLY after about 7 hours I figured out what to do.
you will want to attempt a hard drive installation of the game. In this process, you copy the game files to the Desktop, so that the disk, although necessary for running the game, is not necessary for installation.
1. Right-click the Desktop, select New, and select Folder.
2. Insert the Install Disk into the drive.
3. Exit any autoplay screen that may appear.
4. Open My Computer.
5. Right-click the CD-ROM drive containing the Install Disk and select Open.
6. Click Edit at the top of the window.
7. Click Select All.
8. Click Edit again.
9. Click Copy.
10. Close the window.
11. Right-click the New Folder on your desktop and select Paste. (The game files will now copy.)
12. Once the files from the Install Disk are copied proceed to step 13.
13. Upon completion, remove all disks from any drives.
14. Double-click the Setup folder.
15. Double-click on the Sims3Setup.exe icon, looks like two silver arrows and a half-cirle on a blue background. (The installation should now begin.)
After its done installing, pop in the disc again and PLAY THE GAME!!! Easy as that. (:
I did this and it worked for me (: