Specify a physical location for Virtual Directories in Web Setup Projects
Visual Studio users may find this article at CodeProject.com helpful.Note however that in general I don't recommend using Visual Studio to build MSI setups.
When generating a MSI Installer with Visual Studio 2005 through a Web Setup Project, there is no possibility to specify the physical path of the Virtual Directory that is created. The location defaults to a subdirectory below the root of the Web Site (typically this home directory is ‘C:\Inetpub\wwwroot’).
This article explains how to add an edit box for the physical location, using Orca.