Server configuration SQL Server 2008
Best practice is to use a domain account for SQL Services, preferably a different one for SQL Server and SQL Server Agent. These accounts should not be local admins (and do not need to be), you should use a principle of least privilege. You need to set these up in advance so you can enter the account credentials during SQL Server setup.

One question, why on earth are you doing a new project (it is 2016) on an 8 year old version of SQL Server? SQL Server 2016 RTMs [releases to manufacturing] on 1.6.2016, i.e. in just over 4 weeks. I'd recommend using that.