I have done a setup that included only a small text file and the 3 MSXML3 related merge modules.
Only the «AllwaysInstall» feature was present.

I installed it to a folder already containing another different small text file.

The MSXML3 files get installed to INSTALLDIR, which I supose is not intended.
The folder's pre-existing text file is removed.
If I uninstall immediately, 2 of the MSXML3 files remian in INSTALLDIR


I must conclude that this must be a bug in these merge modules.
Since the equivalent MSXML3 merge modules available for download at Microsoft's are much older than the ones that come with VFP9, and that VFP9's help states that you must include these merge modules if you will be using cursortoxml(), then I think that Microsoft should tell us what merge modules to use.

>Since you suspect the MSXML3 merge modules are the cause, you might want to create another InstallShield project as a test that installs only the MSXML3 merge modules plus one small file, for example a text file, to the [INSTALLDIR]. Before running the install, create the [INSTALLDIR] directory on the target machine and put another file of some kind in there. Then run the test install and see if the other file you placed in the [INSTALLDIR] gets removed. This may help determine if the problem is within the MSXML3 merge modules per se or if it is caused by some kind of interaction between these merge modules and other components in your real project's MSI file.