Rob Mensching has written a post about the WiX toolset being included with the Rosario release of Visual Studio Team System. WiX is part of the toolset used to create the installation packages for Visual Studio, as well as being one of the first open source projects ever at Microsoft. Whereas Visual Studio setup projects (.vdproj) can only be built using devenv and thus require Visual Studio to be installed on the build computer, the WiX toolset supports msbuild via custom tasks.
In the post, Rob goes over a series of questions and answers regarding WiX and Visual Studio to explain what's being included and when. WiX is included in the November 2007 Rosario CTP. By the way, that CTP doesn't include any new Team Build features, for those who were curious. You'll have to wait for the next CTP to see what we're doing in Team Build.
Well, four months ago the Visual Studio setup team approached me to ask if I could help them with that first part of the "Rosario" mission: "enhance collaboration between developers." They had already adopted the WiX toolset as the platform to build the Visual Studio installation package and were now seriously considering shipping the WiX toolset as part of the Visual Studio product. The VS team saw that the WiX toolset enabled developers to collaborate on installation package development and wondered what it would take get the WiX toolset in a state they could release and support for developers around the world.