I tried installing Silver Stripe in the root directory of a virtual host on Windows machine and I got lots of errors, however when trying to install in a sub-directory, everything was fine.
The errors I think were caused by this code "$_SERVER['SCRIPT_NAME'])" which appears throughout the install file and the rewritetest.php file. When installing into a sub-directory (presume the sub-directory was called silverstripe) the value for $baseURL would be /silverstripe. All good.
But, if you install into the root directory, $baseURL returns a backalsh "\". So, the first major issue this causes is that it can't redirect to the install.php file because the path is \/install.php. The backslash just shouldn't be there.
More info about this behaviour at http://www.webmasterworld.com/php/3752500.htm
So I gave up on my Windows local development machine and installed it on my production Linux server and although it installed fine, I noticed that the redirect path to the install file was //install.php and even though Apache disregards the additional forward slash, it's not meant to be there either.
So unless I've done something wrong, there is a bug when trying on install into the root of a site.