So I installed disk 1 then disk 2 and when I started the game I was prompted to install the HD texture on disk 2.
But the progress bar didn't move for over an hour (I was taking care of kids and didn't notice right away) .
A google search later and I find that the install order should be, Disk 1, then the HD textures and disk 2 last.
I tried it and the hd textures started installing right away properly.
A manual with instructions how to properly install this would be nice UBI ahem...