Is your *.msi typically launched via an *.exe? If so, you will want to see what properties are getting passed via commandline--I've seen this with any number of packages (most recently Nero 7).
The problem is that a Response Transform is created by actually launching the package, and hooking the Property table to see what changes during the UI sequence. It's launched in a particular mode that makes no changes to the system, and so the bootstrapper might be necessary to launch the transform wizard.
The *.msi log should show what is being passed by the *.exe bootstrapper. I would recommend the following if it is an InstallShield setup:
HOWTO: Logging an InstallScript MSI Project
http://support.installshield.com/kb/view.asp?articleid=Q105237Or, if it is a custom bootstrapper that won't pass parameters for you, the logging policy is a little better suited:
INFO: Enable Windows Installer Logging with Group Policies:
http://support.installshield.com/kb/view.asp?articleid=Q110697