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I always do a full install, as it makes the game run much quicker. If you've got space on your hard drive, then definately do a full install. You also never have to change disks.
As far as TOB goes, there is no harm in loading it before you start. Watcher's Keep (one part of TOB) can be completed before you actually finish Shadows of Amn, but the rest doesn't occur until after.
I hope this helps.
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