>I used VFP (6.0 sp3) setup wizzard to create a netsetup. When installed on the target all looks ok, except that I get a subdirectory called Setup with setup.exe and the other setup files in it. How do I avoid this?

It's not all files - it's enough of them to provide a means for uninstalling the application on a local system. You can hack the SETUP.STF file to prevent it from being produced; it will make uninstalling the application difficult later, and you'll have to repeat the hack each time you recreate your distribution. I posted the description of this hack about a year ago - you can search my previous messages for the details. The hack is not supported by MS, and if you break something, you own both pieces - I'm not about to support it either.