Software Deployment

I would avoid setting a dynamic file as key path if at all possible.

The help file MSI.CHM (google for it) has a lot of information on the file tables, but in a nutshell, when you change a file, information about its size and version need to be updated in the file table. If the file has no internal version information, then you need to update the MSIFileHash table. For reliability, you need to delete the old file and add the new file so that Installshield can do all the hard work for you.

If you are capturing an install, I would not use dynamic file linking. This sounds like you have done a capture and now are trying to add a file through the ISM.
If you are working with an inhouse written app, that you will build often, then create an ISM, set key paths appropriately (look at the MSI.CHM) single DLL, EXE etc as a key path.

Dynamic file linking has NOTHING to do with Keypaths...
It allows you to make a link to a file, or folder, and when you build the MSI, it will add the latest file, or files, if you linked it to a folder with multiple files, so you don't have to talk to developers (or any body else) who might change those files that you need in your MSI.

If you are building your release and you are getting only an EXE, first of all, are you running a fully licensed version of InstallShield 2012 Spring???

If you are, click on the symbol  that looks like a CD and follow the wizard, or go to Build>release wizard (if not fully licensed, you wont get the following options)

Welcome, next,
    Product config, default it will make a new product, Next (you can overwrite an existing config)
        Specify a release, default will make a new release, Next (you can overwrite an existing release)
            Filtering settings, you probably aren't using these, Next (they are used for multiple feature MSI's with diff build options)
                Setup Language, choose your default (should be set in the ISM), Next
                    Media type, from the drop down, choose CD, Next (bear with me)
    Disk spanning, automatic or custom, choose automatic, Next
        Release configuration, compress all files, leave files uncompressed, custom, Choose 'Compress all files', Next    
            Setup launcher, REMOVE the tick from create a setup.exe, Next

you should now be able to click Next,2 times, then the finish button.

This will build a single external CAB file called Data1.cab, don't be fooled by the miss leading reference to a CD, if your app is over 600 MB it just builds one single cab file.

hope that helps.