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I dont believe that you can use MSI's upgrade and patching scheme while using dynamic file linking. Dynamiic file linking is bad. I wrote up a post on reasons why its just awful:http://www.adventuresintechnology.net/?p=34
I have accomplished this. I have turned an msi project into a clickonce deployer. Please contact me if you need help:aim: dimensionserversemail: jmcallister[@]iet-solutions.com