For reference, this is the whole selling point of something like the surface over say an ipad. If the software is compaible with the operating system, then it will install on the surface. The surface is just a small windows computer. Office will install just fine.
As said. See if you can turn your cd int an iso (it may be the case that the usb cd drive isn't getting enough power). alternatively you could download a copy of office 2007 through whatever means you choose, and then just use your genuine license key when installing.