when trying to install the full package on win32 from an installer dir that only has buffered the files for the basic version then the dir is reported as invalid.
the marker for the difference is seemingly the "readme.txt".
contents are probably like this:
"This folder contains the "Basic MiKTeX" package set.
To install MiKTeX, run miktex-setup-2.9.4503.exe.
For more information, visit the MiKTeX project page at
let the installer report what exactly it found and why it does not fit.
e.g. "you are trying to install a full version but the selected dir only contains files for the basic version."
you might further want offer a button to view those readme in an external text viewer or editor to help the user in clarifying this problem.
in cases where there is no readme file at all you might give more precise hints, e.g. "could not find setup readme file for the selected dir".
as the status seems to be fiddled out already when pressing "ok" for the selection it should work to display the status underneath the shown dir in the main panel of the wizard and gray out the "next" button. the current behaviour of yelling not earlier than the "next" button is pressed might be less optimal.