I have just downloaded the game and this is the message i keep getting when i try to load it up "Is LFS correctly installed on a hard drive?". Can any one help me?

Is the executable file in the same folder as the data and docs folders?

Well, have you installed it correctly on a hard drive? Meaning it extracted correctly, all subfolders and files are there, the files are read & writeable, etc.

Are you maybe using Vista? If so, make sure the LFS process/user who runs LFS (you) has the appropriate folder/file rights set.