I'm trying to install the Fallout s Restoration Mod, but when I choose to install it straight into the Fallout 2 folder, after it's done, it tells me Fallout is running in "compatibility mode". where do I install it into, or how do I get it out of compatibility mode?

Could you describe your problem in more detail?

when it tells me to choose a folder during installation, I choose the folder labeled "fallout 2", because otherwise it tells me I need to choose the installation directory. then, after it's done installing, I try to play Fallout 2, but it tells me it's running in compatibility mode and won't start.
Never mind, I uninstalled it and reinstalled it, and now it's working fine

My apologies for reviving this thread, but I had the same problem.
I too uninstalled and reinstalled (both FO2 and RP 1.2), but it didn't work for me.
I tried that twice, making sure all traces of FO2 and RP were gone when I tried again.
After installing FO2 I ran it to check if it was working, which was the case.
Than I installed RP and tried to run FO2 again.
Again it showed the compatibility error.
When I looked into the FO2 directory I noticed fallout2.exe changed in FALLOUT2.EXE after installing RP.
Searching this forum, NMA and google I found some references to compatibility having to be turned off.
Rightclicking FALLOUT2.EXE showed all compatibility settings were turned off.
Than I noticed the Apply button was available, so I clicked it and than clicked the OK button.
After that FO2 worked.
When moving the cursor over the rock behind the native in the 1st screen it showed me that RP was installed correctly.
If someone else has this problem, hopefully this might be the answer.