Driver Installation Issue with Installshield - installshield-2009

Question

I am just trying to install using Installshield 2009 a demo driver written by me.
I wrote a demo inf file.
I also wrote a simple console application in VC++.
Then I wanted to install the application along with the drivers and so I created Basic MSI Project and added my application exe to it.
After this I added my inf file to it using Device Driver Wizard(located in Set Up Design >>> New Feature) where installshield also added the .sys and .cat files.
Now the problem is that when I run the generated msi file it only installs the application and the driver does not installed.
During installation it gives me a Windows Security window and when I clink on "Install this driver software anyway" it proceeds ahead for install completion.
But the are no drivers in system32/drivers and no entried in registry.
The demo driver contain just basic driver functions with printfs in them.
The inf contains:
[version]
Signature="$CHICAGO$"
Class=RKP_LTO_DEMO_DD
; GUID created by me usingGUIDGEN tool
ClassGuid={03E9C4D5-178E-4684-B407-A3E103D71CE9}
Provider=%DD_DEMO%
CatalogFile = dd_demo.cat
DriverVer=02/24/2012, 2.0.1.2
[DefaultInstall]
CopyFiles=XYZ_Device.Copy
AddReg=XYZ_DeviceHW
[XYZ_Device.Copy]
demo_dd.sys
[XYZ_DeviceHW]
HKLM,SYSTEM\CurrentControlSet\services\,demo_dd,0x00000000,"%12%\demo_dd.sys"
[SourceDisksNames]
1=%RTO_DISK_NAME%,Sample_DIF,0
[SourceDisksFiles]
demo_dd.sys=1,,
[DestinationDirs]
XYZ_Device.Copy=12
[Strings]
SPSVCINST_ASSOCSERVICE= 0x00000002
DD_DEMO = "RKP XYZ DD DEMO"
DisplayName = "RKP XYZ Driver Install Frameworks"
ClassName = "rkp xyz dd_demo"
DD_DEMO.DeviceDesc = "Rkp Xyz WI DIF Sample"
rto.SVCDESC = "RKP XYZ Device Driver"
RTO_DISK_NAME ="RKP XYZ Installation Disk"
The installshield install log gives the following message (0xE0000301):
DIFXAPP: INFO: ENTER: DriverPackageInstallW
DIFXAPP: WARNINGRIVER_PACKAGE_LEGACY_MODE flag set but not supported on Plug and Play driver on VISTA. Flag will be ignored.
DIFXAPP: INFO: Installing INF file 'C:\Program Files (x86)\DEMO\My Product Name\dd_demo\dd_demo.inf' (Plug and Play).
DIFXAPP: WARNING:No device Ids found in INF 'C:\Windows\System32\DriverStore\FileRepository\dd_demo.inf_amd64_neutral_c3727dded0bf2410\dd_demo.inf' for current platform.
DIFXAPP: INFO: RETURN: DriverPackageInstallW (0xE0000301)
The driver gets installed when I install it using run32dll.exe.
I verified this by checking the system32/drivers folder and the seeing the registry entry.
But with installshield it does not install it.
Will anybody pls let me know what might be the issue and how to resolve it?
How to fix this issue?