Cesar, thank you for your assistance with my issue. I also discovered i indeed did not have all the proper codecs installed. i updated my klite mega codec pack and made sure LAV splitters and all required codecs were installed this time. i then replaced all the source setup and autorun files with my own including my downscaled mp3 and then tried to rerun setup and amazingly it worked!!

even turning off 'addDXFilter' in setup.ini did not return any errors plus i got the tiny setup exe size i wanted. thanks for your help, i never would have guessed it was me not having an updated codec pack installed.
PS - Here is the result of my downscaled mp3 size - Original in package: 14 mb for Music1.mp3 and MusicSI.mp3
After removing both and downscaling my autorun music to 64 bits and compressing pngs/wavs/etc, my music1.mp3 for a 1 min 12 sec clip was 504 kb and the output
setup.exe was 7 mb even with the proper encoder/decoders set up.

cheers
-Kitsune
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