UPDATE:
I FINALLY was able to get it to install! Problem is, I had to commandline Steam to install it for me. After "googling" this issue, I found a few other Steam games that had this problem. One of the resolutions was to go through the following steps in order to get it to work:
Start Button > Run > "c:\program files\steam\steam.exe -install d:"
That last bit in quotes above is the default installation path to Steam, and where d: = your Optical drive where you have the game disc. For me, my actual command was "c:\games\steam\steam.exe -install f:"
It still didn't seem like it was going to work, as it gave me some C++ 2008 Redistributable error from Microsoft, but while I was in the midst of my preperations to defenestrate my computer, the game came up and I was " O_O!!! ZOMG! IT WORKS!" and was finally able to play it! I guess I'm just lucky I had bought Portal... >.>
My question is why does it have to be this way? What if I didn't have Steam installed on my computer? I buy a disc, I want to install from my disc. I don't want to go through a third party application to install directly from the disc.
Thank you anyway. Hopefully someone will find this helpful.