Grigore,
I feel your pain, but not with VFP7 on XP-Pro - I created an installshied express setup (3.51) of a VFP6 application from my XP Pro machine and installed it on a clients windows 2000 machine - they have the same result. I don't think it as anything to do with VFP7 or Windows XP - I suspect the Windows Installer engine. I haven't figured it out yet, but will be posting any findings here.
You're not alone...
Erik
~Erik Folley