This appears to be an instance of the problem
documented here:

http://tinyurl.com/82dt2
aka:
http://groups.google.nl/group/microsoft.public.platformsdk.msi/browse_thread/thread/2359de6cc83c3b2f/67ef84f8f0ba99db?lnk=st&q=%22Ignoring+disallowed+property%22+msi&rnum=4&hl=nl#67ef84f8f0ba99db

I ran into problems installing as a 'power user' but
not an admin on a windows XP box. The program was
always installing in C:/

Running msiexec with logging revealed the following lines:

MSI (s) (48:F8) [18:15:47:990]: Ignoring disallowed
property X
MSI (s) (48:F8) [18:15:47:990]: Ignoring disallowed
property TARGETDIR
MSI (s) (48:F8) [18:15:47:990]: Ignoring disallowed
property DLLDIR
MSI (s) (48:F8) [18:15:47:990]: Ignoring disallowed
property USERNAME
MSI (s) (48:F8) [18:15:47:990]: Ignoring disallowed
property COMPANYNAME
MSI (s) (48:F8) [18:15:47:990]: Ignoring disallowed
property SOURCEDIR
MSI (s) (48:F8) [18:15:47:990]: Ignoring disallowed
property ROOTDRIVE

Values were not being passed from the UI to the actual
installation script. This is apparently a known issue
which can be resolved by using  SecureCustomProperties
to pass them from the UI to the installer, as
documented in the link above.