Hi tcoftw,
DOS is rather archaic and there was no standard way to install software onto it. So developers made their own install utilities and tools. Sometimes they included multiple tools for different tasks. So that install.bat could be to copy the game from the original CD-ROM onto a person’s hard drive and maybe useless for you. Have you tried running the game in DOSBOX instead of trying to install it before hand?
Otherwise you can buy the game from here. It will guarantee to work on modern computers.
http://www.gog.com/game/kings_quest_7_8