The setup.exe doesn't create the system %temp% folder if it doesn't exist.

[LuisZhang]

On the Windows Server 2019, the temp folder may be removed by the system, you can refer to The %TEMP% folder with logon session ID is deleted - Windows Server | Microsoft Learn

In this scenario, if the %temp% folder doesn't exist,  we got the following error when running the setup.exe which was built by InstallShield 2021 or 2022.  If we create the %temp% folder manually when it doesn't exist, there is no problem. Is this by design or an issue?

Besides, we verified the setup.exe built by InstallShield 2015, there is no problem. 

For the InstallScript project, it pops up the following error.

For the InstallScript MSI project, it pops up the following error.

[shunt]

In the article provided - Windows reports the deletion of the TEMP directory as an Issue and provides workaround solutions for it. I do not read the article that the deletion of the TEMP directory is an intended feature and something that should be supported by 3rd party applications.

An Installshield compressed setup.exe requires the TEMP directory to extract files during installation (this was different in earlier versions of Installshield such as IS2015).

The solution here would be to follow Microsoft's suggestions for the workaround.
Alternatively if this is a common issue for the environment that your application installs into - using an uncompressed build release would remove the need to extract the files to the TEMP directory.