I had the same error, but it was related to where I wanted to install a service.
I had an INI and an Icon file that were also being outputed to the Application Folder within the Installer project. I think my problem came in when I specified another location ([TARGETDIR]) during my installation of the service than the default [ProgramFilesFolder][ManufacturerPath]\blah that it has in one of those installer properties. I needed to simulate on my Dev server how Production is, though - with a D: drive as to where Program Files are really stored. Problem is on my Dev server, doing an "echo %ProgramFiles%" on a command prompt shows my Program Files directory is on my C:, not D: (opposite of Production). So when I told it to install to a D: location (even though D: was really just a map back to my C$ share on my Dev server), it did not work and I got the error in this post. When I told it to install to C:, it did work. It's funny, though, because the files still tracked with my D: location and would copy what I specified in the installer project when I chose D: instead of C: - it was only at the end of the installation where I would get the error and everything would get rolled back/deleted. Maybe an edge case, but might help someone.
-Tom