I recently installed Vista RC1 on my tablet and couldn't get the Web Application Project MSI to install properly.

It turns out it needs to run as admin and the Vista 'allow privliged action' dialog apparently didn't fully take care of the problem.

I found this link helpful, I hope you do too!

http://richmercer.com/archive/2006/09/01/Installing-Web-Application-Project-in-Vista.aspx