A project that creates a bootstrapper (and uses the Bundle element) should
produce an EXE, and not an msi.  An MSI does not have the appropriate 'entry
point' which is what the error indicates.

You might find it easier to use the built-in support for installing .Net
4.0.  In my bootstrapper (exe) project I add:
<Bundle .....>
   <BootstrapperApplicationRef Id="ManagedBootstrapperApplicationHost">
      .......... other files
      <WixVariable Id="WixMbaPrereqPackageId" Value="Netfx4ClientRedist"  />
      <WixVariable Id="WixMbaPrereqLicenseUrl" Value="NetfxLicense.rtf"/>
   </BootstrapperApplicationRef>

</Bundle>

or look at:
http://wixtoolset.org/documentation/manual/v3/howtos/redistributables_and_install_checks/install_dotnet.html

you could also get a lot of information from src\ext\NetFxExtension\wixlib



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