setup.exe file was created using the Installshield 2010. When this setup.exe for AMD64 is being invoked, the LaunchExe invokes the 32bit pkgmgr instead of 64-bit pkgmgr.
when I had made changes to be SW_SHOWNORMAL, the directory was set to c:\windows\syswow64 instead of c:\windows\system32.
Since its a 64-bit machine, the setup.exe is supposed to launch the executables from c:\windows\system32, but that doesn't happen. The installation folders seems to be correct, they are created under "c:\program files" but not under "c:\program files(x86)".
The installshield project is a basic MSI. The current problem was noticed in windows 2008 R2. This same setup.exe file was successful in windows 2003.
To be precise, invoking pkgmgr.exe inside a custom action in windows 2008 R2 invokes 32-bit pkgmgr.
