Webster's definition of install ("to set up for use or service") is vague; most computer users would lean more toward Wikipedia's explanation, excluding standalone executables from performing installation, though not a point I wish to argue as people's interpretations vary widely. Regarding insufficiency, though, consider:
1.) There are 100+ words added every year. Last year, Webster said "I tweeted that to all my followers" meant you "chirped" it, like a bird. I'd call that an insufficient explanation, since expanded to include the word's new meaning. Unfortunately, dictionaries have to play catch-up to words we invent/repurpose over time.
2.) Dictionary definitions are often vague to keep them short and allow for variations. For instance, look at Webster's definition of computer - by that, many televisions, microwaves, calculators, and even watches are computers. Which may be technically accurate since they perform those functions through use of a computer chip. However, few would say "I just bought a new computer" and then show off the $20 watch that can store people's names & phone numbers. Just goes to show the disconnect between "official" definitions and how people actually define/use words.
3.) Those spyware definitions exclude spyware that does not require installation, collects information aside from browsing habits/personal data, does not result in commercial gain, is installed with a user's knowledge, and/or stores the data locally instead of transmitting over the internet. For instance, if I installed spyware on your computer to record your chats (for non-commercial gain) and had the logs stored on a hidden flash drive that I swapped out weekly, both definitions would say it is not spyware at all though I believe we'd both agree it would be spyware.
Now, you're right that many sites/companies will not criticize the CNET Installer because they use similar tactics. Regardless, name a "major player" aside from NOD32 and the scan will turn up clean. Or look at the characteristics of NOD32's detection and note that they do not match those of the CNET Installer. Either way, still a false positive.
Bottom line: I too believe the intention is clear - get most people to use the installer and accept the unrelated software it offers. However, the CNET Installer being flagged in the VirusTotal scan was a false positive.