Good question. The setup.ini is used by the setup.exe for a bunch of things. One of those is to pass command line parameters to the Windows Installer service when launching the package. Take a look at those command line parameters. I believe it's called CmdLine or something similar. If it's blank you're good to go. If there are parameters, you may want to include those in the transform. From personal experience, you can ignore the setup.ini the vast majority of the time.
Hope that helps,