Have you changed to the CD drive before trying to run setup?
If you have only one hard drive (or one partition) the 1st CD-ROM or DVD drive will (probably!) be called d:
so try this:
type d:
press enter
then just to check
type dir
press enter
you should get a listing of all the files on the CD-ROM
then try typing setup
enter
Best of luck
Memetic
P.s. are you sure it is setup and not install that you need to run - I can't remember.