This is a common error and means lots of different things if you Google it. In my case, I looked into the wxs install log and found the following:

WriteIIS7ConfigChanges:  Error 0x800700b7: Failed to add appPool element
WriteIIS7ConfigChanges:  Error 0x800700b7: Failed to configure IIS appPool.
WriteIIS7ConfigChanges:  Error 0x800700b7: WriteIIS7ConfigChanges Failed.
Which was a bit strange since I hadn't changed anything in the particular service being installed and the deployment was destructive, removing everything installed first before installing about 50 programs.
Well, in my case, the build wasn't completely destructive! What had happened was that I had installed a couple of related programs manually and used a name for the App Pool, one which the installer was trying to use. Because it existed, it didn't simply join the existing one, it returned an error.
To fix, I simply created a new app pool for the existing services and moved them over. I then deleted the old app pool and ran the installer again.