You may have a problem with the CD or with the files for installation.
The CD should be CD-R (not CD-RW), burnt at low speed (1x), and using the HFS (not HFS+) file system.
The downloadable System 7.5.3 is, unusually, in the form of a divided image, labelled as an 'img' and 'parts'. These need to be decoded and expanded into floppy disk images contained within a single folder. The folder can be on your desktop or on a CD, just as you are attempting to do, so that Installer 'knows' and can 'see' that all required parts are available. Did Installer show you a line of animated floppy disk icons in the installation progress window when the installation had begun? As Installer finishes with each 'floppy', the line of icons advances to the left in the familiar fashion.
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