I am sorry to say : Perhaps my write-up was not clear.
"Previous version is already installed" message is of the engine.exe and not my setup.exe. Here, all i want is , even though engine.exe aborts its installation with the pop-up, i would want my setup.exe to skip the "engine.exe" and rather install the next bundled application and make the installation successful.
Now what happens is : the installation of setup.exe quits once that engine.exe cant be installed with an error message :
"There is a problem with the Windows Installer Package. A program run as part of the setup did not finish as expected. Contact your support personnel or package vendor."
I hope i got myself clear this time.