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I would want to run the installer on both 32-bit and 64-bit target machine, as far as I know x86 option should work for both, or maybe I am wrong,
The 32-bit installer will install on both 32 and 64-bit Windows, but on 64-bit Windows, it'll install as a 32-bit app.
You cannot combine installer so it installs as 32-bit on 32-bit Windows and 64-bit on 64-bit Windows. You have to create separate .MSI's, one for 32-bit and one for 64-bit if you want your application to run as 64-bit on 64-bit Windows.
CAB files can be a maximum of 2GB, each, so you'll have to have multiple CAB's.
Really, for such a huge application, I wouldn't recommend using the built-in Installer project. I would go with a professional tool, like Wix, AvancedInstaller, InnoSetup, or InstallShield. You will have far greater control over building the installer.