For quite a while I had a problem with setup builds. As soon as I was building I was getting errors like:

Could not create the file '<file>.tmp' 'Access is denied.'

It was driving me nuts and I had a hard time finding the solution. Finally I got a tip about KB Q329214 from a friend and in here I found the solution.

It was the Mergemod.dll that wasn't correctly registered that was the root cause. So the following had to be done at command prompt (with admin rights of course), the (x86) is there as I'm running Vista64:

regsvr32 "C:\Program Files (x86)\Common Files\Microsoft Shared\MSI Tools\mergemod.dll"

So now I have updated to SP1 and again I ran in to the same problem. This time I remembered that there was a solution so finding it was a bit easier, but if had written this post right away it would have been no issue to solve this. Mental note: Always blog about these fixes.