A bit late in the day with a reply but this entry is (and has been for a long while) the first hit on Google for the search term 'msi +extract +"merge module" '
The solution is to use your authoring tool to convert the MSI to the tool's native format. I use Wise Package Studio. On opening an MSI, it defaults to asking you if you want o convert to WSI. If you select 'Yes', somewhere along the line, WPS asks you for a loction into which it can deposit the extracted MSM.
Easy...