Simply turning Norton Crashguard off will prevent this error from happening. The Mac OS Installer quits all running applications as a normal part of the installation process. Norton Crashguard incorrectly interprets this action as a crash.
You should install Mac OS 8.6 by starting up with extensions off. You do this by holding down the Shift key when you turn the Macintosh on. You could also disable non-Apple extensions using the Extensions Manager (in the Control Panels folder). If you have a Mac OS 8.6 CD-ROM disc, you should start up your Macintosh from the disc to install the OS.