I would avoid linking subfolders with a dynamic link. I have been caught by problems with upgrades because of this. The issue is that for sub folders the component GUID can change as well as component name. If you link just top level folders then when you reference the previous build in the release wizard settings, InstallShield will correlate the componentid guid and component value.
If you find yourself in a situation where you are trying to pull in a lot of sub-folders, and you can live with the risk (or possibly InstallShield has since fixed this), then if you want to exclude only one or two directories, why not create a step in your build system to either move the folder or if not needed at all for the build, delete it.
