I hve released version 3.10 of warSetup.
This release goes around the problem in Vista when insufficinet privileges cause Explorer to fail to drop files in WarSetup. It's also tested with the very latest WIX 3 release (from December 2008). I have also fixed a number of minor bugs and added some additional features.
See my warinstall-blog on http://warinstall.jgaa.com for information on my future plans with WarInstall (hint: more features both for power and convenience).