All files are installed into the BackMaster directory, and the installation takes up about 1 megabyte of hard disk space. I have tried it each way, and never found it to make any difference. I suspect this warning is a holdover from some isolated incident, and will have no effect on the vast vast majority of users. Sytos is distributed on 3 floppy disks. Two of them are used in the installation and the third is used for constructing a disaster recovery disk.
Installation is flawless.
You click on install, give it a directory, and installation proceeds. During the installation, you are given a choice of hardware to choose drivers from. I selected the Colorado Jumbo. The program must install drivers into config.sys, and permission to do so is requested before proceeding. All files are installed into the Sytos directory, and the installation takes up about 2 megabytes of hard disk space.