The flow goes like this:
Step 1: Create the application and stage it for the installer to consume:
1) Create a WPF project somewhere on your harddrive. Name the solution Application.
2) Place the following postbuild command in the project:
xcopy /iery "$(TargetDir)*.*" "$(SolutionDir)..\Installer\Deploy"
3) Build the project and close the solution.
Step 2: Create the installer
4) Create an IsWiX installer in the same directory as selected above. Name the solution Installer.
5) Open the merge module wxs fragment and select the IsWiX addin from the tools menu.
6) Use the Files and Folders designer to author your files into the merge module.
7) Use the Shortcuts designer to create a shortcut on the desktop.
8) Exit the IsWiX addin.
10) Build the MSI
That's it! The source tree is 100% compatible with Microsoft Team Foundation Server so checking it all into TFS and creating a build for it is a piece of cake.