As Rob mentioned, one of the things we’re looking at fixing in a WiX v2 service release is to downgrade the version of mergemod.dll to one that doesn’t have a particular bug. For more information on the bug, see Rob’s original blog post and bugs 1965131 and 1911165.)
Until that release, you can download the latest WiX v3 release, extract mergemod.dll from the .zip file, and replace your copy of mergemod.dll with it. (If you installed via the Votive installer, it will be in Program Files\Windows Installer XML\bin.)
We’ll get that v2 SP1 out to solve the problem instead of just working around it.