Against all odds, I think you never saw the root setup screen of VFPs setup CD, as you started setup.exe instead of
vfpstart.hta:

InstallShield Express aka ISE or ISX doesn't automatically install within the Visual Foxpro Setup. It's also not behind the Service Releases part of the FoxPro setup, as you assume, it's a separate setup and you can also find it on the CD in the installshield folder. It's Flexera Installshield 5.0 Express (Limited Edition) from about 2005. It includes the VFP merge modules, exclusively. ISX fr the VFP7 CD intalled VFP7 merge modules, obviously, and VFP8,... Anything else, directly from Flexera or today Revenera does NOT have VFP merge modules with it.
The merge module files are not seperate in the CD, they come to your PC only by explicitly installing InstallShield from here.
Then, SP2 upgrades files, including VFP9.exe and - if installed - merge modules, VFP9 merge modules. Lkewise the Hotfix. If you're lucky you find all VFP related merge modules in the Hotfix3 you still have, but again, what I said before: The Hotfix is not a setup that puts files where they belong, finally, you'll have to specify a folder to which the Hotfix extracts a list of files including a readme with instructions of what to do with them.
And last not least, since you obviously have upgraded to the full version of InstalShield 2024 you depend on this version to work with the merge modules you find from the ISX setup, Sp2 and Hotfix, if not, only Revenera could fix that, but my guess is they won't do so for a dead product like VFP, maybe too pessimistic on my side.
On the other hand, Inno is capable to do VFP setups without merge modules. Besides, you can also do Installshield setups without merge modules, jut directly provide necessary DLLs, etc.
Last thing from the readme.html: VFP7 already came with ISX and installed merge modules into Common Files\Microsoft Shared\MergeModules\ instead of Common Files\MergeModules\, which means your full version of IS could even look for merge modules somewhere else, so it's also worth just using Windows Explorer file search to find all files with msm extension and see which locations pop up and then configure your IS version to where it finds these files.
And then about the non working "Service Releases", that point of the VFP installation forwarded you to a MS web page offering VFP service packs, XSource.zip, VFPCOM Utility and some more, but not merge modules or ISE. All that stuff is in VFPX, no need for that to work.