Set-Up Project

You need to add a custom build step that creates the dotfuscated version and places it where the non-dotfuscated version is.

Don't quite follow. I have created the dotfuscated version and replaced the non dotfuscated version. My question is when I create the install package it writes over dorfusated version and recomplies the code into a new undortuscated version for inclusion in the package. All I am trying to do is get my undotfuscated version into the install package i.e. the msi file.

Excuse me, but what is your goal here? In your last message you said:

All I am trying to do is get my undotfuscated version into the install package i.e. the msi file.

But your initial question states:
The problem is when I then rebuild the set-up project, vb.net recompiles the exe from the source code and overwrites the dotfuscated version which defeats the object.
Are you trying to include both the dotfuscated and undotfuscated versions in your setup package??

Should have said

All I am trying to do is get my dotfuscated version into the install package i.e. the msi file.