Rather simple thing, but took me a fair bit to solve this one. Maybe cause I am blind.
Had .NET project create with target framework 4. Changed them to 3.5.
In installer/setup project changed .NET framwork to 3.5 also changed link.
If I clicked on setup.exe it still would dl .NET Framework 4.
Go to Installer/Setup project properties. Click on prerequisites and select what you need.
Simple ehhhh 🙂