I'm not a Vista person so I am a little blind but here are the things I think you are doing right:
running in a passworded administrator account while installing
installing to a folder that does not reside under 'program files'
not installing as a service (it doesn't shutdown right and is borked if you try)
usually, when things go this wrong, I try as hard as I can to get back to a 'clean slate' and then do it again and hope it works.
to get to a 'clean slate'
re-boot to make sure nothing F@H is running
log in as the same (administrator) account as when you installed
use add/remove programs to uninstall f@h
delete any and all directories associated with any previous F@H installation.
re-boot (just to make sure it's all gone)
login to your passworded admin account
create a directory somewhere with a name that indicates it is your first f@h instance
install your first instance, pointing to the directory you created.
after the install, go to that directory and run install.bat. if it doesn't work, I have no idea what to try different. If it does work, boot your machine (to turn everything off again)
login to the same passworded admin account
create a second directory somewhere with a name that indicates it is your seconf f@h instance.
install your second instance, pointing to this second directory.
after the install, go to that directory and run install.bat. (again, if it doesn't work, I'm stumped.. if it does, boot your machine (to turn everything off again)
now, login to the same account you have been using.
go to the first f@h directory and make a shortcut to the fah.exe file.
go to the shortcut properties and edit the target line to add the following switches:
-local -forceasm -verbosity 9. Now your target line should look like this:
"C:\Folding SMP 2\fah.exe" -local -forceasm -verbosity 9
run this first instance of f@h usiing the shortcut. and make sure it is working OK
if it is, re-boot to turn everything off
login to the same account again
now go to the second instance and create a shortcut to it's fah.exe with the same switches added. start the second instance using the shortcut. when you are configuring this one, make sure you say YES to the advanced options and when you get to machine ID, set it to 2.
after this configuration, re-boot (last time.... I promise!)
from here on out, you will need to start both instances, using their shortcuts everytime you start windows. you should get a text window for each one as you do. minimize them, but do not close them.
I know this is a long install process with so many (arguably unnecessary) re-boots, but since it is giving you a lot of trouble.... this is the most failsafe way I can think of to get everything going reliably.