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Same problem with IS 2012

We have a Basic MSI Project created in IS 2011 and recently upgraded to IS 2011.
Creating Virtual directory under Default Web Site is not working in Windows 2008 R2. The installtion itself is rolling back and we cant see any traces of installtion on the machine.
However this was working with the installer created using IS 2011 and stopped working after upgrading to IS 2012.
Any Help on this is higly appreciated.
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