Could you post this specific issue in the Tech Support and Bugs forum? We need GM to see it. I don't understand why it won't work for you!
Try one test for me. Create a new project called something very, very simple like, "test". Then add 1 frame, add an icon from distribution options, and then go through the process with editing the iss file that is created. Be sure to save. After it compiles, run the setup and see if it adds an icon to your desktop.
I just want to remove any possible issues from having to change your project name when it had a hyphen and keep it simple.
Sorry I can't resolve this!