http://consumerdocs.installshield.com/selfservice/viewContent.do?externalId=Q110636&sliceId=1
We will bear that in mind but it generally falls under the "something on your PC has configured it in a manner which causes problems for InstallShield and/or other programs". It's very difficult to give specific advice when it's not clear what a user has done or what effect that has had which brings a problem about and 'hacking the registry' to fix one problem can cause worse problems elsewhere so we are cautious about giving such advice. Such problems are usually user-specific so good advice for one may be very bad advice for another, even if they think they have the exact same problem.
I wouldn't personally say the fault lies with the Registry because that does nothing in itself, it's just a data repository; something ( application or OS ) set the data within the Registry.
Windows needs to know where specific things are and keeps internal links pointing to files and file directories, particularly desktop links and what it considers essential folders like My Documents etc, and moving those to other drives can cause problems. These are not real physical links and folders ( they have the same name but they are different directories depending on who has logged on ) so have to be handled in a special way by Windows. My gut feeling is that it was Windows which created the Registry entries when you instructed it to move the files elsewhere.
WD seem to be the innocent party unless they did update the Registry. Microsoft could be accused of failing to make Windows deal with the movement of files to different disks and external drives in a better way but they would likely argue the mechanism works well, and as it should, and pass the blame to Acresso for InstallShield failing to deal with an unexpected situation in a more elegant way. Both could potentially argue you brought the problem on yourself by moving the folders without understanding the consequences of that, but you could, usually quite reasonably, retort, how were you to know what the consequences would be, and ask why was there no warning when you did what you did ?
It's a chain of cause and effect but at least you've managed to reverse what was causing the problem and got a satisfactory outcome. In order to avoid future problems I would suggest creating additional folders for music, pictures and so on on the external drive and putting your files there rather than moving any of the "My ..." folders.