What is compatibility mode? If you mean "3.1 or 2.0 (best fit for system)" I am not running that. I have pure 3.1 selected. I got teh following reply from InstallShield tech support (after and angry email)
--- InstallShield Tech Support Start ---
Microsoft Windows Installer 3.1 was included with Microsoft Windows Server 2003 Service Pack 1 (SP1). Windows Installer 3.1 is available as a redistributable system component for Windows Server 2003 Operating System.
Usually the error “Wrong OS or OS version for application” occurs when the Operating System that you are using is not compatible with the Windows Installer Redistributable.
Unfortunately in this scenario, You cannot install this redistributable on the 32-bit and 64-bit editions of Windows Server 2003 SP1. To update the 32-bit and 64-bit editions of Windows Server 2003 SP1, or to update the 64-bit editions of Windows XP, download the hotfix that is described in Microsoft Knowledge Base article 898715 instead of the 893803 (v2) package.
Please check the below MSDN article which discusses more in detail about the above information that I have provided about Windows Installer 3.1 version. You can also find links to the
http://support.micro...kb;en-us;893803Below is the link to download the hotfix described in Microsoft Knowledge Base article 898715.
http://support.micro....com/kb/898715/--- InstallShield Tech Support End ---
After reading the KBase article it seems that there's a bug in Windows Installer 3.1 shipped with Windows Server 2003 SP1. The redistributables are updated with a fix, but the redistributables cannot be installed in Windows Server 2003 SP1. Therefore there is a specific hotfix just for Windows Server 2003 that updates MSI 3.1 to "V2".
After applying the hotfix my installation runs without any error message. I don't know if I dare use 3.1 or if I should switch to "best fit" or MSI 3.0