diff -r 4c0affb3a7fc Lib/msilib/__init__.py
--- a/Lib/msilib/__init__.py	Sat Mar 26 19:17:15 2011 +0800
+++ b/Lib/msilib/__init__.py	Sun Mar 27 12:03:36 2011 +0800
@@ -283,19 +283,36 @@
                         [(feature.id, component)])
 
     def make_short(self, file):
-        parts = file.split(".")
-        if len(parts)>1:
-            suffix = parts[-1].upper()
-        else:
-            suffix = None
-        prefix = parts[0].upper()
-        if len(prefix) <= 8 and (not suffix or len(suffix)<=3):
+        disallow_chars = set(file).intersection(r'/\?|><:*"')
+        if disallow_chars:
+            # remove disallowed characters
+            for c in disallow_chars:
+                file = file.replace(c, "")
+
+        replace_chars = set(file).intersection('+,;=[]')
+        if replace_chars:
+            # replace chars with underscore
+            for c in replace_chars:
+                file = file.replace(c, '_')
+
+        prefix, suffix = os.path.splitext(file.upper())
+        # remove extension separator character
+        suffix = suffix[1:]
+
+        if not (disallow_chars or replace_chars or
+            '.' in prefix or ' ' in prefix or
+            prefix=="" or len(prefix)>8 or len(suffix)>3):
             if suffix:
                 file = prefix+"."+suffix
             else:
                 file = prefix
             assert file not in self.short_names
         else:
+            prefix = prefix.replace(".", "")
+            prefix = prefix.replace(" ", "")
+            if not prefix:
+                prefix = suffix
+                suffix = ""
             prefix = prefix[:6]
             if suffix:
                 suffix = suffix[:3]
diff -r 4c0affb3a7fc Lib/msilib/test/test___init__.py
--- a/Lib/msilib/test/test___init__.py	Sat Mar 26 19:17:15 2011 +0800
+++ b/Lib/msilib/test/test___init__.py	Sun Mar 27 12:03:36 2011 +0800
@@ -43,6 +43,92 @@
         self.assertEqual    (
             msilib.make_id(".s\x82o?*+rt"), "_.s_o___rt")
 
+class Test_make_short(unittest.TestCase):
+    #http://msdn.microsoft.com/en-us/library/aa368590(v=vs.85).aspx
+    """Short and long file names must not contain the following characters:
+        slash (/) or (\)
+        question mark (?)
+        vertical bar (|)
+        right angle bracket (>)
+        left angle bracket (<)
+        colon (:)
+        asterisk (*)
+        quotation mark (")
+
+    In addition, short file names must not contain the following characters:
+        plus sign (+)
+        comma (,)
+        semicolon (;)
+        equals sign (=)
+        left square bracket ([)
+        right square bracket (])
+
+    No space is allowed preceding the vertical bar (|) separator for the
+    short file name/long file name syntax. Short file names may not include
+    a space, although a long file name may. A space can exist after the
+    separator only if the long file name of the file name begins with the
+    space. No full-path syntax is allowed.
+    """
+
+    def setUp(self):
+        self.original_add_data_func = msilib.add_data
+        msilib.add_data = lambda db, t, v: None
+
+    def tearDown(self):
+        msilib.add_data = self.original_add_data_func
+
+    def test_simple(self):
+        # no short names already stored
+        test_dir = msilib.Directory(0, 0, 0, 0, "dir", 0)
+        self.assertEqual(test_dir.make_short("t\x82st"), "T\x82ST")
+        self.assertEqual(
+            test_dir.make_short("filename.ext"), "FILENAME.EXT")
+        self.assertEqual(test_dir.make_short("A"), "A")
+
+    def test_shortening_required(self):
+        # no short names already stored
+        test_dir = msilib.Directory(0, 0, 0, 0, "dir", 0)
+        self.assertEqual(test_dir.make_short("with spc.txt"), "WITHSP~1.TXT")
+        self.assertEqual(test_dir.make_short("txt.longext"), "TXT~1.LON")
+        self.assertEqual(test_dir.make_short("LongFiles"), "LONGFI~1")
+
+        self.assertEqual(test_dir.make_short("aixc++"), "AIXC__~1")
+        self.assertEqual(test_dir.make_short(".buildinfo"), "BUILDI~1")
+        self.assertEqual(test_dir.make_short("py.~1.5.~"), "PY~15~1.~")
+        self.assertEqual(test_dir.make_short("2.dots.TXT"), "2DOTS~1.TXT")
+
+    def test_avoid_duplicates(self):
+        test_dir = msilib.Directory(0, 0, 0, 0, "dir", 0)
+        self.assertEqual(test_dir.make_short("with sp0.txt"), "WITHSP~1.TXT")
+        self.assertEqual(test_dir.make_short("with sp1.txt"), "WITHSP~2.TXT")
+        self.assertEqual(test_dir.make_short("with sp2.txt"), "WITHSP~3.TXT")
+        self.assertEqual(test_dir.make_short("with sp3.txt"), "WITHSP~4.TXT")
+        self.assertEqual(test_dir.make_short("with sp4.txt"), "WITHSP~5.TXT")
+        self.assertEqual(test_dir.make_short("with sp5.txt"), "WITHSP~6.TXT")
+        self.assertEqual(test_dir.make_short("with sp6.txt"), "WITHSP~7.TXT")
+        self.assertEqual(test_dir.make_short("with sp7.txt"), "WITHSP~8.TXT")
+        self.assertEqual(test_dir.make_short("with sp8.txt"), "WITHSP~9.TXT")
+        self.assertEqual(test_dir.make_short("with sp9.txt"), "WITHS~10.TXT")
+        self.assertEqual(test_dir.make_short("with sp0.txt1"), "WITHS~11.TXT")
+        self.assertEqual(test_dir.make_short("with sb0.txt"), "WITHSB~1.TXT")
+
+    def test_bug_7639(self):
+        test_dir = msilib.Directory(0, 0, 0, 0, "dir", 0)
+        self.assertEqual(test_dir.make_short("data.seq.one.dat"), "DATASE~1.DAT")
+        self.assertEqual(test_dir.make_short("data.seq.two.dat"), "DATASE~2.DAT")
+
+    def test_strange_make_short_with_tilde(self):
+        test_dir = msilib.Directory(0, 0, 0, 0, "dir", 0)
+        self.assertEqual(test_dir.make_short("data~1.dat"), "DATA~1.DAT")
+        self.assertEqual(test_dir.make_short("data.database"), "DATA~2.DAT")
+
+    def test_strange_make_short_with_tilde2(self):
+        test_dir = msilib.Directory(0, 0, 0, 0, "dir", 0)
+        self.assertEqual(test_dir.make_short("data.database"), "DATA~1.DAT")
+        self.assertRaises(
+            AssertionError, test_dir.make_short, "data~1.dat")
+
+
 
 if __name__ == "__main__":
     unittest.main()