How do I run the setup program in windows vista/windows seven? every time I click on it, it brings up a "File not compatible" error.

Should just work. Try re-downloading it.

Same problem here (also with Duke Nukem 3d)

I tried re-downloading/enabling compatibility mode/ run a admin but that wouldn't wok either, incidentally I tried it on a different computer (Netbook Win7 Version?) and while I couldn't get into the game I was able to run setup.exe.

Gonna try it on a different/older PC over the weekend.

EDIT:

You can access the setup via the Start menu button and go to the folder named 'GOG.com'. There, in the game's folder you'll find a working setup.exe

News to me. I can't get a working version, no matter where or how I access it. It just keeps giving me the "file not compatible" error -- as an admin, in different compatibility modes, etc. etc. etc.

I would recommend doing a clean (re)instal of Blood without the compatability tweaks.
Then go to START->Gog.com->One Unit whole of Blood->Setup

Try out if it works. If it does you should see a DOSBOX prompt that takes you to the Setup.

If it doesn't:

Rightclick Setup->Properties and check the path, it should somewhat look like this (I think)

"D:\One Unit Whole Blood\DOSBOX\dosbox.exe" -conf dosboxBlood_setup.conf -noconsole

Copypaste the -conf blahblahblah part if necessary.

I hope this helps.

Just want to report that this works fine for me too. Please note:

Make sure under the CFG file in your GoG.com Blood folder isn't ticked as read only, otherwise changes won't be saved.

...Yeah that one got me. : (

Game still works for me under Linux. Should rule out the game files themselves, it's probably the path/config getting screwed up on Win.