The PED-Basic should only be installed with the driver and the software from Brother: http://welcome.solutions.brother.com/bsc/public/us/us/en/dlf/dlfh/000000/000100/dlfh000107.html?reg=us&c=us&lang=en&prod=hf_basiceus&type2=47&os=99&flang=91&dlid=dlfh000107
Since you've attempted to install the software from another source, you may have the product partially installed in the Windows registry. This could block a new installation. You can try to uninstall the product with Revo Uninstaller: http://www.revouninstaller.com/revo_uninstaller_free_download.html
Otherwise, you will need to go through the registry and delete lines related to PED Basic. Make sure to back up the registry before searching it. Start > type regedit into the search box. Then File > Export (choose all and back up to a location other than the c: drive).
Embroidery Magic 2 is not compatible with Vista (or Windows 7). For more information, try contacting the creators via the contact at: http://www.auntymdesigns.com/html/software.html
. The work-around is to use the software is a second machine with an older version of Windows. This can be a real computer, a dual boot computer or a virtual computer. For most of these you need a valid (licensed version) of the older Windows OS and the virtual computer program (for the last option). The exception is that Virtual PC and XP mode can be installed for free on computers running Win7 Pro or Ultimate. For a virtual computer, you will not be able to have the PED Basic hardware available to both the real and virtual computer. It can be installed on one or the other. Also files can't be shared directly between the real and virtual computer. They need to be saved to external media (optical media or external drive).
However, the installation of the software or hardware in a virtual computer is the same as any software install on a real computer.
I hope this helps.
(alternatively, you can upgrade your software. See the auntymdesigns site above.)