From Sean Donahue (Microsoft).
During Sequencing you enter the information in the Package configuration phase that is common through all of the .OSD files in the suite, and then you enter what is called the “Installation Phase”. It is during this phase that you Install, Test and Configure the application(s) being virtualized. Also during this phase the Sequencer “monitors” the actual installation of the application so that it can capture all of the files, registry settings, com, embedded services, fonts, etc. that the application would normally lay down on a “client” during its native install.
The best practice states, “You should install the application to a 8.3 root directory on the Q:\ drive of the Sequencer. Each installer in the package should then have its own subdirectory under this 8.3 root.