>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.

FYI: I've built installation files with these merge modules and have not seen the issues you describe. I am using Wise for Windows Installer version 6.0.