I have been in contact with Neil Enns and have confirmed a bug to do with the localization changes in 3.0.4309.0. The bug occurs when you have a seperate wix library with localization files and you reference it from a msi wix project. This error is raised when defining a culture and also when you dont specify one.
You recieve the following:
'Error 1 The localization
variable !(loc.SetupDlgBannerBitmap) is unknown. Please ensure the
variable is defined.'
for each localization string used.
Neil Enns has a work around which includes adding the Cultures parameter to the Light task in the target LinkUnlocalizedProject.
I am assuming there is more work to be done to enable the abiltiy to not specify a culture (As visual studio says 'Example: en-US;ja-JP. Leave blank to build all cultures.' which does not currently work.
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Thanks to Neil for the fix.