I was getting the error:
This Setup Requires Internet Information Server 5.1 or higher and Windows XP and higher when I was trying to install a setup project on windows server 2008 with IIS 7.0.
After 1 hour of searching, I discovered there was some configuration problems with the Conditions Editor (Requirements on Target Machine)
(IISMAJORVERSION >= "#5" AND IISMINORVERSION >= "#1") OR IISMAJORVERSION >= "#6"
In the above case, the minimum IIS Version required is 6.
If you want to install on IIS Version 7.5 and above then use the below condition formula:
(IISMAJORVERSION >= "#7" AND IISMINORVERSION >= "#5")