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Close toy2.exe but don't touch rundll32.exe (it's a Windows app for running old apps from 32-bit operational systems, most old games running through rundll32.exe). Also try to launch the game, then open Task Manager (Ctrl+Alt+Del by default) and check for processes toy2.exe and rundll32.exe.
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Right click on toy2.exe - Properties - Compatibility - Set "Run this app in compatibility mode with Windows 95/98, Windows 2000 or Windows XP". If the game doesn't run - open the directory with the game and find toy2.exe. After you installed the game, install Toy Story 2 Fix (simply extract all files to the game directory).
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Also it is recommended to install DirectX from the disc (inside the disc image in "Setup" - "DirectX" folder).You will need the utility for mounting disc image files, like WinCDEmu, UltraISO, Alcohol 52%/Alcohol 102% or Daemon Tools Lite
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