1. Mount Flatout2.iso using whatever. (Daemon tools lite is nice)
2. Install the game (When it asks you to insert Flatout Disk 1, just press OK)
3. Update by running flatout2_update_US_10-11-12.exe
4. Copy flatout2.exe to game directory. (Default directory is "%programfiles(x86)%/Empire Interactive/FlatOut 2/"
5. Play the game, you're done.