The IsWiX project templates assume you'll create an MSI project called Foo and a MSM project called FooMM. These assumptions are meant to automate and template as much as possible and can be changed to your tastes.
After creating the projects, you then add a reference from Foo to FooMM. This then resolves $(var.FooMM.TargetPath).
You can watch a short, silent walkthrough video here.
If you have additional questions, feel free to email me. And thanks for using IsWiX. :)
Update: We now have tutorials.