This thread has been really enlightening.  Thanks everyone for the information. 
 I had this issue a 
little while ago, with VS building against one version of the runtime and the 
merge modules 
delivering another.  After a lot of searching online I finally found the code 
snippets to get VS to 
build against the latest version.  I then had to go and update all our 
projects, including some 3rd 
party libraries.  We've just come up foul of this again when my boss added a 
new project which 
didn't run properly because it was missing this special magic.  It sounds like 
the policy files are 
pretty much required when deploying the VC runtime as this issue is really hard 
to track down.  It 
certainly took me long enough to find a work around, and this thread has just 
shown me that I should 
have been including the policy files all along.  I think the How-To guide in 
the WiX docs should 
definitely be updated so that they don't tell the reader that the policy files 
aren't needed. 
Actually, they say "There is generally no need..."  However, since the update 
to VS that updated the 
merge modules, I don't think this is a fringe case anymore.

Rob




Richard wrote:
> For the benefit of others, this appears to be by design.
> 
> By default, your application is bound to the old runtime, even though
> the merge modules get updated (so you can't distribute the old runtime
> unless you saved a copy of the merge modules before you updated).
> 
> However, if you define _BIND_TO_CURRENT_VCLIBS_VERSION=1 when
> compiling your code, then the automatically generated manifest will
> bind to the updated runtime.  You have to define this from the project
> options and you have to define it for all the runtime dependencies
> used by your application in order for everything to be bound only to
> the new runtime.
> 
> Otherwise you must use the policy MSM and the new MSM to install the
> new runtime and redirect users of the old runtime to the new one.  Of
> course, that might break some applications that depended on the
> behavior of the old one compared to the new one... but if you use the
> vcredist_x86.exe, its going to install the policy MSM anyway it seems.


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