I have created a simple Wix 3 Merge Module in VS 2005 ( .wxs )

<?xml version="1.0" encoding="UTF-8"?>
<Wix xmlns="http://schemas.microsoft.com/wix/2006/wi">
  <Module Id="TestMergeModule" Language="1033" Version="1.0.0.0">
    <Package Id="ef2a568e-a8db-4213-a211-9261c26031aa" Manufacturer="Me" InstallerVersion="200" />
    <Directory Id="TARGETDIR" Name="SourceDir">
      <Directory Id="MergeRedirectFolder">
        <Component Id="Test_ModuleComponent" Guid="{1081C5BC-106E-4b89-B14F-FFA71B0987E1}">
          <File Id="Test" Name="$(var.Project.TargetFileName)" Source="$(var.Project.TargetPath)" DiskId="1" />
        </Component>
      </Directory>
    </Directory>
  </Module>
</Wix>

And I have added the project "Project" as a reference to this Merge Module, however I continue to get this error

Error   7	Undefined preprocessor variable '$(var.Project.TargetFileName)'.

Any suggestions, I am sure I am just missing the obvious here.