Your default .htaccess causes a 500 internal server error. I've modified below to show how I think you meant for this to be done.
The following default .htaccess causes 500 Internal Server Error:
RewriteEngine on
RewriteRule ^$ app/webroot/ [L]
RewriteRule (.*) app/webroot/$1 [L]
Options -MultiViews
With your above rewrite rules it appears that www.domain.com would be rewritten to www.domain.com/app/webroot and then the app takes over and says i need to direct this guy to the install folder. so it redirects to this url www.domain.com/install which rewrites to www.domain.com/app/webroot/install at that point it breaks down somehow.
I've verified the the following works:
RewriteEngine On
RewriteBase /
RewriteCond %{REQUEST_URI} !^app/webroot/
RewriteRule (.*) app/webroot/$1 [L]
Options -MultiViews
It seems as though that your web.config also has a similar issue that I will dig deeper into. Let me know if you have any questions or need any further insight.