The two options for component files were DotNet 2.0 and DotNet 3.5 -- The default was 2.0 -- I have 3.5 on the computer on which I have Orcas installed -- I changed the option to 3.5 and re-published the application and it did install!!!
I t took about 30min and required a reboot, which I guess is to be expected for a new DotNet install --- I'm not sure if this can be improved. I started trying to use C# because C++ required a manual deployment strategy which is somewhat complicated.
Thanks!