So, I just decided to put Halo 1 on my PC again to just play through a couple times. I keep trying to install it, but it always does not go past zero percent. It stays at "Copying GSarcade.exe"
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Untick "install gamespy" and try again, no one uses gamespy for halo and ther version on the disk is out of date; you wont miss anything.
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Sounds like your disc might be scratched. Grab a torrent of the ISO and install that instead, using your legit key of course. See if that works.