More bad news and additional info:
1. I'm testing this a build deployment for Visio 2007. It's an exe install that I want to change to an msi.
2. My LD environment is v9.0 sp2 and patches 0428 and 0519 applied. The agent is not on the clean build machine.
3. I tried converting using AS on Win7 2 times and so far have had no success. Oddly enough the second test broke my clean win 7 environment. Looks like the repair session is failing too. Will need to restore from imgage I took of it before I began the AS build.
4. The win 7 environment had (because I'm restoring now) UA 10 sp2 installed.
The Error 1606 is an issue with Windows Installer not finding a system variable. In this case it looks like %ProgramFiles%. We have seen this issue lately at our helpdesk on a few computers when installing applications that use Windows Installer. We started having this issue with some Office 2010 installations and although the user shell folders appeared to be correct, we still got this Error 1606 error referring to the %PUBLIC% variable. I manually set a variable for PUBLIC and then the installation went through just fine(after a reboot). We have had this happen five or six times now.
Here is a Microsoft article on this.. http://support.microsoft.com/kb/886549/
Go into your Studio repackager. On the left side under Captured Installation select shortcuts. In the right pane you will see a reference to DVD Maker. Right click to remove it and rebuild your project.