diff --git a/contrib/win32/mercurial.iss b/contrib/win32/mercurial.iss
--- a/contrib/win32/mercurial.iss
+++ b/contrib/win32/mercurial.iss
@@ -63,16 +63,14 @@ Source: contrib\win32\postinstall.txt; D
 Source: dist\hg.exe; DestDir: {app}; AfterInstall: Touch('{app}\hg.exe.local')
 Source: dist\python*.dll; Destdir: {app}; Flags: skipifsourcedoesntexist
 Source: dist\library.zip; DestDir: {app}
-Source: dist\mfc*.dll; DestDir: {app}; Flags: skipifsourcedoesntexist
 Source: dist\msvc*.dll; DestDir: {app}; Flags: skipifsourcedoesntexist
 Source: dist\Microsoft.VC*.CRT.manifest; DestDir: {app}; Flags: skipifsourcedoesntexist
-Source: dist\Microsoft.VC*.MFC.manifest; DestDir: {app}; Flags: skipifsourcedoesntexist
 Source: dist\w9xpopen.exe; DestDir: {app}
 Source: dist\add_path.exe; DestDir: {app}
 Source: doc\*.html; DestDir: {app}\Docs
 Source: doc\style.css; DestDir: {app}\Docs
 Source: mercurial\help\*.txt; DestDir: {app}\help
-Source: mercurial\locale\*.*; DestDir: {app}\locale; Flags: recursesubdirs createallsubdirs
+Source: mercurial\locale\*.*; DestDir: {app}\locale; Flags: recursesubdirs createallsubdirs skipifsourcedoesntexist
 Source: mercurial\templates\*.*; DestDir: {app}\Templates; Flags: recursesubdirs createallsubdirs
 Source: CONTRIBUTORS; DestDir: {app}; DestName: Contributors.txt
 Source: COPYING; DestDir: {app}; DestName: Copying.txt
@@ -99,6 +97,7 @@ Filename: "{app}\add_path.exe"; Paramete
 
 [UninstallDelete]
 Type: files; Name: "{app}\hg.exe.local"
+
 [Code]
 var
   WriteFile: Boolean;
diff --git a/contrib/win32/win32-build.txt b/contrib/win32/win32-build.txt
--- a/contrib/win32/win32-build.txt
+++ b/contrib/win32/win32-build.txt
@@ -3,11 +3,14 @@ jury-rigged fashion.
 
 It has the following prerequisites, at least as I build it:
 
-  Python for Windows
-      http://www.python.org/ftp/python/2.4.3/python-2.4.3.msi
+  Python 2.6 for Windows
+      http://www.python.org/download/releases/
 
-  MinGW
+  A compiler:
+    either MinGW
       http://www.mingw.org/
+    or Microsoft Visual C++ 2008 SP1 Express Edition
+      http://www.microsoft.com/express/Downloads/Download-2008.aspx
 
   Python for Windows Extensions
       http://sourceforge.net/projects/pywin32/
@@ -15,19 +18,19 @@ It has the following prerequisites, at l
   mfc71.dll (just download, don't install; not needed for Python 2.6)
       http://starship.python.net/crew/mhammond/win32/
 
-  Visual C++ 2008 redistributable package (needed for Python 2.6)
-      http://www.microsoft.com/downloads/details.aspx?familyid=9b2da534-3e03-4391-8a4d-074b9f2bc1bf&displaylang=en
+  Visual C++ 2008 SP1 redistributable package (needed for >= Python 2.6 or if you compile with MSVC)
+      http://www.microsoft.com/downloads/details.aspx?FamilyID=A5C84275-3B97-4AB7-A40D-3802B2AF5FC2
       
   The py2exe distutils extension
       http://sourceforge.net/projects/py2exe/
 
-  GnuWin32 gettext utility
+  GnuWin32 gettext utility (if you want to build translations)
       http://gnuwin32.sourceforge.net/packages/gettext.htm
 
   Inno Setup
       http://www.jrsoftware.org/isdl.php#qsp
 
-      Get and install ispack-5.3.4.exe which includes Inno Setup Processor,
+      Get and install ispack-5.3.10.exe which includes Inno Setup Processor,
       which is necessary to package Mercurial.
 
   ISTool - optional
@@ -45,41 +48,37 @@ Once you have all this installed and bui
 Mercurial repository you want to package, and name the repo
 C:\hg\hg-release.
 
-In a shell, build a standalone copy of the hg.exe program:
+In a shell, build a standalone copy of the hg.exe program.
 
+Building instructions for MinGW:
   python setup.py build -c mingw32
-  python setup.py py2exe -b 1
-
+  python setup.py py2exe -b 2
 Note: the previously suggested combined command of "python setup.py build -c
-mingw32 py2exe -b 1" doesn't work correctly anymore as it doesn't include the
+mingw32 py2exe -b 2" doesn't work correctly anymore as it doesn't include the
 extensions in the mercurial subdirectory.
-
 If you want to create a file named setup.cfg with the contents:
-
 [build]
 compiler=mingw32
+you can skip the first build step.
 
-you can skip the first build step.
+Building instructions with MSVC 2008 SP1 Express Edition:
+  python setup.py py2exe -b 2
 
 Copy add_path.exe into the dist directory that just got created.
 
 If you are using Python up to version 2.5.4, copy mfc71.dll into the dist
 directory that just got created.
 
-If you are using Python 2.6 or later, after installing the Visual C++ 2008
-redistributable package copy into the dist directory that just got created the
-following files:
-  - from the directory starting with
-    Windows/WinSxS/x86_Microsoft.VC90.CRT_1fc8b3b9a1e18e3b_9.0.21022.8
-    the files named: msvcm90.dll, msvcp90.dll and msvcr90.dll
-  - from the directory starting with
-    Windows/WinSxS/x86_Microsoft.VC90.MFC_1fc8b3b9a1e18e3b_9.0.21022.8
-    the files named: mfc90.dll, mfc90u.dll, mfcm90.dll and mfcm90u.dll
-  - from the directory named Windows/WinSxS/Manifests, the manifest file
-    starting with x86_Microsoft.VC90.CRT_1fc8b3b9a1e18e3b_9.0.21022.8
-    (rename it to Microsoft.VC90.CRT.manifest) and the manifest file starting
-    with x86_Microsoft.VC90.MFC_1fc8b3b9a1e18e3b_9.0.21022.8 (rename it to
-    Microsoft.VC90.MFC.manifest)
+If you are using Python 2.6 or later, or if you are using MSVC 2008 to compile
+mercurial, you must include the C runtime libraries in the installer. To do so,
+install the Visual C++ 2008 SP1 redistributable package. Then in your
+windows\winsxs folder, locate the folder containing the dlls version 9.0.30729.
+For x86, it should be named like x86_Microsoft.VC90.CRT_(...)_9.0.30729(...).
+Copy the files named msvcm90.dll, msvcp90.dll and msvcr90.dll into the dist
+directory.
+Then in the windows\winsxs\manifests folder, locate the corresponding manifest
+file (x86_Microsoft.VC90.CRT_(...)_9.0.30729(...).manifest for x86), copy it in
+the dist directory and rename it to Microsoft.VC90.CRT.manifest.
 
 Before building the installer, you have to build Mercurial HTML documentation 
 (or fix mercurial.iss to not reference the doc directory):
@@ -94,21 +93,23 @@ file and type Ctrl-F9 to compile the ins
 Otherwise you run the Inno Setup compiler.  Assuming it's in the path
 you should execute:
 
-  iscc contrib\win32\mercurial.iss /DVERSION=foo
+  iscc contrib\win32\mercurial.iss /dVERSION=foo
 
 Where 'foo' is the version number you would like to see in the
 'Add/Remove Applications' tool.  The installer will be placed into
 a directory named Output/ at the root of your repository.
+If the /dVERSION=foo parameter is not given in the command line, the
+installer will retrieve the version information from the __version__.py file.
 
 To automate the steps above you may want to create a batchfile based on the
-following:
+following (MinGW build chain):
 
   echo [build] > setup.cfg
   echo compiler=mingw32 >> setup.cfg
-  python setup.py py2exe -b 1
+  python setup.py py2exe -b 2
   cd doc
   mingw32-make html
   cd ..
-  iscc contrib\win32\mercurial.iss /DVERSION=snapshot
+  iscc contrib\win32\mercurial.iss /dVERSION=snapshot
 
 and run it from the root of the hg repository (c:\hg\hg-release).