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It is an intended behavior. And the fact that after installing you see the correct version confirms that the feature works.
SetVersionFrom
isn't supposed to change the theproject.Version
instead it sets some special WiX instructions so WiX compiler extracts and assigns the version at compile time. The code documentation does reflect this behavior: -
Most likely the file you are specifying does have v5.2.3.0 or it has some inconsistency between AssemblyFile and Assembly version (see the documentation). A simple test (below) reveals that the feature works correctly:
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New Post: Bugs in setting version
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