Team Foundation Server uses MSBuild for continuous integration and on-demand build support. Unfortunately MSBuild has a glaring deficiency, it doesn't support setup/deployment projects. With companies that rely heavily on MSI packages, this makes TFS a hard sell.
The fundamental problem with deployment projects in Visual Studio is that they are literally in Visual Studio. Unlike VB and C#, which have separate compilers, setup/deployment projects can only be built by the Visual Studio IDE itself.
As demonstrated by Nikhil Singhal, there are ways to invoke the VS IDE from a Team Foundation Server build.
The hack is simple. After the compilation of the main solution is done, we invoke the Visual studio command line to build the vdproj project and copy the msi and setup.exe to the appropriate output folder.
According to Buck Hodges of Microsoft, the setup/deployment projects are going to be replaced by WiX in the next version of Visual Studio and Team Foundation Server. WiX, also known as the Windows Installer XML toolset , is a powerful tool for generating Windows MSI packages. WiX 3, currently in beta, exposing all of the Windows Installer 4 features and is compatible with both NAnt and MSBuild.
In what appears to be happening all too often, WiX lacks the rich tool support Microsoft is known for. Even with the Visual Studio add-on Votive, developer will find themselves spending most of their time hand-editing XML files.
WiX has a rather unusual history for a Microsoft project. According to Wikipedia, it is their first project to be released under the Common Public License and is also their first project to be hosted on a non-Microsoft server, specifically SourceForge. WiX has quickly become an indispensible tool at Microsoft and is used for key products such as SQL Server 2005 and Office 2007.
Rob Mensching reports that WiX 3.0 is nearing completion. The latest build, 3.0.4805, is currently available on SourceForge. In addition to the occasional formal build, WiX offers a weekly release for early adopters.