Don't take what I said the wrong way. WiX is just an MSI authoring tool, and as such has many of the same or comparable capabilities that InstallShield does (I've used both and much prefer WiX). It's just that launching one installer from within another is not something Microsoft supports or allows with the current MSI technology (InstallSheild or WiX). However, if your Setup.exe doesn't ultimately run an MSI, then maybe.
Snag a verbose log file and see what is says. We use a Setup.exe that launches our installer with logging, as a verbose log file is critical for debugging many issues.
Good luck with your project.