Try this to install your Starcraft. Install game in Compatibility mode, but run the game normally (no compatibility mode).
"To install using Compatibility Mode, right click on the Setup Application Stub (usually titled Setup.exe or whatever program you are opening to install the driver) and click on Properties, and then click on the Compatibility tab, enable Compatibility Mode and select the version of windows you originally installed the program on from the drop down list, then click on OK and try again."
SC came out in 98, so this may be a good chance to see how far back the mode works...
Also, try using the INSTALL.EXE on the SC disk instead of the SETUP.EXE dunno why it would be any different, but worth a shot.
My starcraft won't load more than 10% and it doesn't have a scratch, works on XP but not on Windows 7
Assuming you have a Battle.net account, register your CD key and download the install file from Battle.net. That is how I installed mine, plus I do not need the CD to play . Unfortunately, I still have problems with how the color palette renders