I sent this to Scott Hanselman like three months ago and didn’t mention it here, but I ran into this again today (with the same set of users that originally had the problem

• surprise, surprise) so I figured it was worthy of repetition.

If you have the Microsoft Loopback Adapter running on a machine where you try to execute a web setup project generated from Visual Studio .NET (an MSI file), you’ll get the following error:

The specified path ‘http://MACHINENAME/http://MACHINENAME/InstallFolder’ is unavailable. The Internet Information Server might not be running or the path exists and is redirected to another machine. Please check the status of this virtual directory in the Internet Services Manager.

The problem, as you can see from the message above, is the Loopback Adapter doing its job - looping back on itself. That messes up the installation path, though, and the MSI pukes.

To fix the issue, disable the Loopback Adapter, run the installer, then when the install is finished you can re-enable the Loopback Adapter.