theMSI installer bootstraps using .net 2.0 - which means you need the 2.0 SDK installed to build the msi. It also has issues as 2.0 is available by default on all supported windows versions (and was only needed for XP and server 2003).

So get rid of it and reduce the build time dependencies.

see http://petermarcu.blogspot.co.uk/2010/02/which-version-of-net-is-built-into.html for an overview of OS/.net versions.