Yes you will need to install it on "B". Meaning you run the setup on "B" even though the location you select is "A's" hard drive.
But from the sounds of it you want to trigger an application on "A" from "B" so that the application runs in "A's" address space. If this is so then you can create a service that listens for instructions. Then when "B" starts it has an application that communicates with the service on "A" and when it ("A") recieves the message from "B" it could shell out to the program. However you may have to impersonate a user for the application to run, depending upon what you are doing.
There are other ways in which to accomplish this but with the amount of information you are providing its a little hard to tell exactly what you want to accomplish.
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