This is an incorrect error message. MSIEXEC is looking at the schema verson in the SummaryInformationStream of the MSM and seeing it's newer then the version of MSI on Windows and giving you this error message.
In truth, merge modules can never be installed because they have no concept of Product or Features. They are merely encapsulated collections of components and related installation metadata. Merge modules are like .LIB files in C/C++ and are statically linked (merged) into an MSI at build time.
NSIS isn't a Windows Installer technology so it can't use merge modules. Instead you should use the redistributable provided by Microsoft and launch the EXE with the correct command line.
You're only other options are to deploy the desired DLL privately (in your application directory), statically link it in your EXE or dump NSIS and create a proper MSI.
Be aware of the security / patching implications of your choice.