Install ASP.NET local web application

FWIW, IsWiX project templates (VS2012+) excel at this story. Here is a rough outline:

Install Windows Installer XML and Industrial Strength Windows Installer XML

Use the VS project templates to create an ASP.NET Web Application Solution

Name: BookStore

Location: C:\Source\BookStore

Solution Name: Application

Check Create directory for solution

Select Single Page Application and click OK

Right click the BookStore project in the solution explorer and select Publish

Click Custom and enter the name LocalDeploy and click OK

Select the FileSystem publish method

Enter ....\Installer\Deploy and click Publish

Close the solution

Use the VS project templates to create a Windows Installer XML \ IsWiX Solution (.MSI/.MSM) solution

Name: BookStore

Location: C:\Source\BookStore

Solution Name: Installer

Check Create directory for solution

Double click the BookStoreMM.wxs in the solution explorer.

Select Tools | IsWiX AddIn

Click Files and Folders

Drag and drop the files and folders you want to deploy from the source view to the destination view

Click Save and close IsWiX

Click Yes when prompted by Visual Studio to reload the source. Take a look at the XML written by IsWiX.

Right click references in the BookStoreMM project and add a reference to WixIIsExtension.dll

Double click the BookStoreMMcustom.wxs in the BookStoreMM project.

Select Tools | IsWiX AddIn

Click Namespaces

Select the iis namespace

Click Save and close IsWiX

Click Yes when prompted by Visual Studio to reload the source. Take a look at the XML written by IsWiX.

Author a website component under the DirectoryRef element and add a ComponentRef element to the ComponentGroup element. The exact elements and attributes will depend on the specific IIS needs of your application. Here is a general sample.

<?xml version="1.0" encoding="UTF-8"?>
<Wix xmlns="http://schemas.microsoft.com/wix/2006/wi" xmlns:iis="http://schemas.microsoft.com/wix/IIsExtension">
  <Fragment>

    <!-- Reference Custom Components Below -->
    <ComponentGroup Id="Custom">
      <ComponentRef Id="webHomePage"/>
    </ComponentGroup>

    <!-- Author Custom Components Below -->
    <DirectoryRef Id="MergeRedirectFolder">
      <Component Id="webHomePage" Guid="someguid" KeyPath="yes">
        <iis:WebSite Id="default" SiteId="*" Description="HomePage" Directory="MergeRedirectFolder" ConfigureIfExists="no">
          <iis:WebAddress Id="AllUnassigned" Port="80" />
          <iis:WebDirProperties Id="webDirPropsApi" AnonymousAccess="yes" WindowsAuthentication="no"/>
        </iis:WebSite>
      </Component>
    </DirectoryRef>

  </Fragment>
</Wix>