I'm using the concept in my InstallScript MSI setup and yes, it does work. Use Direct Editor and check the ISIISProperty table - MetaDataValue column. Your variable name will actually be there, not the asterisks.
Bumping this, as I'm doing something similar I've created a dialog to accept the username and password that should be assigned to the application pool, and then assigned the properties that correspond to those text fields to the username and password fields in the IIS Application Pool dialog through the UI. I've tried it both using {MY_PROPERTY_NAME} and and the installer never uses the value the user entered, just the string "".
Is there a manual step required to perform the replacement?
If you are using InstallScript, you need to use an MsiSetProperty call to assign the value of the variable to the property after you get the variable set. (e.g., call AskText to get svPropertyName, then call MsiSetProperty to assign the value of svPropertyName to the property MY_PROPERTY_NAME). FYI, you should be doing something to validate the username/password combo or make sure in your testing that using an invalid combo doesn't crash the install.
