I have heard from a couple of customers who are trying to create a Windows Installer administrative install point that contains the .NET Framework with a service pack and the latest hotfix (MS05-004).  I originally posted instructions about how to create an admin install point for the .NET Framework 1.0 or 1.1 and a service pack, but there are a couple of extra steps and tricks needed to also include a hotfix, so I wanted to post updated instructions.  Here are a set of steps that I used to create an administrative install point on my machine and install the .NET Framework 1.0 or 1.1 and a service pack and a hotfix as a single package:

1. Download the version of the .NET Framework you want to install (.NET Framework 1.0 or .NET Framework 1.1)
2. Create an administrative install point for the .NET Framework by running dotnetfx.exe /c:"msiexec.exe /a netfx.msi TARGETDIR=c:\dotnet" (or you can change c:\dotnet to any folder of your choosing)
3. Download the .NET Framework service pack you want to install (for example .NET Framework 1.0 SP3 or .NET Framework 1.1 SP1)
4. Extract the service pack MSP package to a folder by running <name of service pack>.exe /Xp:c:\dotnet\netfxsp.msp
5. Run msiexec.exe /a c:\dotnet\netfx.msi /p c:\dotnet\netfxsp.msp
6. Locate the .NET Framework hotfix you want to install by going to the Microsoft download center and searching for the keyword security_patch and filtering based on the .NET product family.  When I tried this recently, it gave me this results page
7. Download the correct version of the .NET Framework hotfix you want to install.  Every .NET Framework hotfix ships with a separate version that will only install if you have a specific .NET Framework service pack installed.  So you will need to download the hotfix that matches the service pack you downloaded in step 3 above
8. Extract the hotfix MSP package to a folder by running <name of hotfix>.exe /Xp:c:\dotnet\netfxhotfix.msp
9. Run msiexec.exe /a c:\dotnet\netfx.msi /p c:\dotnet\netfxhotfix.msp

Following these steps will create a Windows Installer administrative install point in the folder c:\dotnet that can be used to install the .NET Framework plus a service pack and a hotfix as a single unit.  Now you can share out the folder for network installations or install directly from there in order to install the .NET Framework, the service pack and the hotfix at the same time.

As future hotfixes are released for the .NET Framework 1.0 or 1.1, you can repeat steps 6-9 above to apply them to your administrative install point.

<update date="6/15/2010"> Fixed broken HTML causing numbering problems for the steps in this post.  Also clarified that these steps work for the .NET Framework 1.0 and 1.1 but not 2.0 or higher. </update>