You probably don't want to use TARGETDIR in this way. TARGETDIR points to the
root directorty (C:\ for example) of where your files will be installed to.
It's not typically where you put components. 

See this link about TARGETDIR: 

http://msdn.microsoft.com/en-us/library/windows/desktop/aa372064(v=vs.85).aspx

See the following link about adding Directory elements inside TARGETDIR:

http://wix.sourceforge.net/manual-wix3/add_a_file.htm



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