It is possible to install the software by copying the install folder. The only problem you will find is that plugins may not install correctly and will just say that SM is not installed.  Once you have copied all the files and applied the nesasery permissions you will need to run GMFBridgeS...

I am not sure that Adobe provide an API to support displaying PSD files but I will have a look and if there is one I will add this to the software.

You do not have all the versions of the .Net Framework installed. You need to make sure on XP that you install each version seperately. My suggestion is that you run Windows update and then make sure you check each optional update that refers to the .Net Framework.