How can I deal with "internal server error" during installer?
Is this before displaying the first step of install or once you start the install?

If this is during the installation, it might mean that your timeout is configured in a way that it considers the page dead before it properly has the time to finish the install.

You might want to workaround that by either changing the configuration to allow longer running pages, or try installing from the commandline (using wp-cli).

If it is before displaying anything, it might be that you haven't used the proper url or didn't put the files at the right place or...

If you follow the steps on that page, it should get you a running civi:

http://wiki.civicrm.org/confluence/display/CRMDOC/Installing+CiviCRM+for+WordPress