Most of the apps today, comes with - an exe or an msi package inside the original exe. Once you run them, they extract contents of the original exe to a folder in temp directory and start installing from that folder.

When you are installing an exe, we need to set installation mode to “install mode”. As per article, https://docs.microsoft.com/en-us/previous-versions/windows/it-pro/windows-server-2008-R2-and-2008/cc754288(v=ws.10) we dont need to set installation mode to “install mode”, when we are installing an MSI.  Go to the line which says “If you install a program from an .msi package, you do not have to run these commands to switch the system in and out of install mode. Instead, you can run the .msi package or associated Setup file directly. "

so when you are installing an app in terminal server, check if you have an exe inside it, or an msi. If msi, you dont have to setup your installation mode to “install mode” .

To manually set to install mode, open elevated command prompt and type change user /install. You can set it back to execute mode by typing change user /execute on elevated command prompt.