This post shows you how to solve "Unrecoverable build error" when creating msi setup file in visual studio.
To fix the problem, First off, you should close your visual studio. Next, type cmd at the "Type here to search" textbox in your windows, then right-click on cmd application and select Run as Administrator.
Enter the command below for Windows 32 bit
regsvr32 "C:\Program Files\Common Files\Microsoft Shared\MSI Tools\mergemod.dll" regsvr32 ole32.dll
For Windows 64 bit
regsvr32 "C:\Program Files (x86)\Common Files\microsoft shared\MSI Tools\mergemod.dll" regsvr32 ole32.dll
Open your visual studio, then try again rebuild the msi file.