I Think Wix only accept a Projects reference and not dll files.
I was waiting for this, since I wasn't sure what you meant by "reference".
When it comes to WiX I find adding references to projects/DLLs to be an utter pain. Maybe I'm just bad with them, I'm not sure, but the easiest way I found to add a project (and all of it's dependencies) was to simply make a bunch of Component
elements, and assign each one a single file from the folder in which the file is being compiled to, see general example below (this is just based off of how I lay out my product.wxs files):
<Fragment>
<ComponentGroup Id="MainProgramFiles" Directory="INSTALLFOLDER">
<Component Id="FooEXE">
<File Source="..\Foo\Foo.exe"/>
</Component>
<Component Id="BarDLL">
<File Source="..\Foo\Bar.dll"/>
</Component>
<Component Id="DotNetZipDLL">
<File Source="..\Foo\DotNetZip.dll"/>
</Component>
<Component Id="AnotherExampleDLL">
<File Source="..\Foo\AnotherExample.dll"/>
</Component>
</ComponentGroup>
</Fragment>
NOTE: you'll need to build your other projects before the WiX files in order for this to work.
If you have any questions, feel free to ask, I hope this helps.