EDIT: Figured it out. The Crossover app does not know how to find setup.exe and must be pointed directly to the executable. Once this happens, the install completes normally.
I have the original CD of the game and tried using it to install MDK2 into a bottle with Crossover 21.2.
The prep work completes normally, and the bottle is created, but the "Installing MDK2" process simply runs the blue bar back and forth and does literally nothing. Looking inside the destination folders for the game files, it is clear that not even one file is copied.
I have tried doing the install from the CD, which Crossover 21.2 recognizes. but the CD never spins up and thus the installer never calls for any files.
Moving the entire CD to an external HD and installing from the folder there has the same result. I waited over 30 minutes for the process to complete before looking at the progress in the destination folder itself.