i know this is an old post , just incase someone else is looking for the solution here it is .....
1) Insert Disc 1 "install"
2) Right click CD icon in My Computer and select Open
3) On the CD open the folder "program files" and inside should be another folder called "EGOSOFT" copy and paste that folder to where you want to install it (e.g C:\Program Files\)
4) Once the files have been pasted there, Take out Disc 1 "Install" and insert Disc 2 "Game"
5) Once again right click the CD icon in My computer and select open
6) Find the folder "EGOSOFT" located in the "program files" folder and copy and paste to the same place you put the other files (e.g. C:\Program Files)
[ i found that instead of copying the entire 2nd 'EGOSOFT' folder, I had to open the folder on the CD and then copy and paste all of the subsequent files into the sub-folder 'x2-the threat' that had been created on pasting the 'ECOSOFT' folder from the first CD]
7) Now Visit
http://www.egosoft.com/download/x2/patches_en.php to download and install these patches in this order;
X²: The Threat Update 1.2
X²: The Threat Update 1.4
Artificial Life Update
X²: The Threat No Copy Protection 1.4
X²: The Threat Update 1.5
When installing the patches the patch might ask you where the game is. Just show the patch where the files are on your computer
. [make sure that this is also the sub-folder 'x2-the threat' (under programmes\egosoft\x2......), as noted in step 6] If they ask to overwrite files then select "Yes to all"
8.) Go to where you installed the file (e.g. C:\Program Files\EGOSOFT\X2 - The Threat) and in that folder you should find an application file named "X2"/"X2.exe" right click it and select "Send To" then selct "Desktop (create shortcut)"
9) Run the shortcut you just made for your desktop and the game should start."