Blood 2: The Chosen was released in 1998 and as such, the installer program on the CD is 16-bit. This means it will not run under Windows 7 x64. But the game can still be installed by manual means.
There are 3 files on the CD we need- DATA, GAME and MOVIES. Go to your game folder, create a folder called "Blood 2" or whatever else you wish, and copy all 3 of those folders to that new folder.
That's it. You're done. Go into the GAME folder, find BLOOD2.EXE and run it.
Now then... there are some patches for this game. The last version was 2.21. The installers in these patches will not work either, to your grand frustration. However, both patch files include all the update data in raw folder format. They both have the GAME folder with update files. Simply copy all files over to patch manually. In my case, I had to patch to 2.0 then 2.21.
I have not yet figured out how to install Blood 2: Nightmare Levels. It might not be possible to install manually.
An odd little note about this game- it supports 1600 x 900 resolution. That didn't even exist when this game was released. However, while the game itself looks fine, the menu screen is rather tiny and the load screen splash images are grainy beyond belief as neither was made to run at this scale.