I admit after first reading this message I had to step back and come back 2 days later, because of how confrontational it was written. You repeat at least twice how terrible that message is that I wrote in an attempt to help people - because many people had issues with this. You use various other forms of hyperbole, entirely unnecessarily ("always, always, always", "how in the name of Yahvo"). No, you didn't insult me, but you also made no attempt to be polite. And it looks like you did not read the Deep Island installation instructions very carefully which are quite explicit about moving Uru out of the global program folder and using Uru.exe to start the game. None of this makes me very motivated to respond... but well, it seems we got an entire discussion here now, so whatever.
Now I am trying to remember what exactly the problems were that we had 10 years ago when I wrote that message.
But I think Sirius hit the nail on the head: the main issue is the Windows "virtual store". This is a mechanism by which different programs will see different files at the same location - when a user process writes to a system location, Windows puts that file into a "shadow directory", and while this process will not see any difference to normal operation, no other process will see that change. That is a great hack to keep old programs working, but when you have a bunch of programs working on the same files (such as the various Uru binaries and Drizzle), it can really mess things up when each of these programs has a different view of what is in that directory!
I'm afraid I forgot the exact symptoms caused by getting this wrong, but I think they were all over the place - stuff just behaved "weird", random parts of the game wouldn't work properly (because some files were missing), Drizzle would show error messages (because it lacked permissions to access some folders). It's really hard to say anything more than "various problems" in a situation like that. It's not like we tried to exhaustively catalogue the issues this causes. We had a series of people reporting a wide range of problems that were all fixed by avoiding admin permissions, so to protect people from this footgun we detected the problematic situation and went on to the next problem. That dramatically reduced the number of people that we had to manually give this advice.
I agree the error message isn't great. But you were offended (it seems) not just by the wording, but also by the content of it. The gist of the message (run Uru as user, not admin) is good advice as far as I know. Maybe others recommend running Uru with admin permissions as you said, and maybe you don't see a problem with running video games with admin permissions (I do, but this is turning into a religious discussion then), but in our experience and best judgment, Deep Island works best when you put Uru into the user folder and avoid admin permissions.
Also, the funny thing is that I start Uru with "UruExplorer.exe" not "UruSetup.exe".
That will just start UruSetup.exe then. You should start Uru with "Uru.exe" (as explained in the docs).