Error -6267 in InstallShield when trying to use VC++ Merge Modules

I receive the Following error when trying to include the VC++ 9 merge modules (policy_9_0_Microsoft_VC90_CRT_x86.msm and Microsoft_VC90_CRT_x86.msm) in my InstallShield project:

"ISDEV : error -6267: An error occurred while extracting files from the .cab file "

This error can be caused by a limit in the filename length for the build path in InstallShield. To remedy this, try setting the "Shallow Folder Structure" setting in the "Build" settings to "Yes".