This package shares most of the same characteristics as the Frontpage 2007 install (i.e. like many office components, it's made of several MSI installs, which are chained together via setup.exe. Remote deployment is setup via setup.exe /admin).
I found when sequencing via the AdminStudio Repackager, an error was encountered:
No matter what I did, even moving copies of this file to the referenced location, as well as dropping it into the same folder as spdesign.exe seemed to not make a difference. After this tweak, I could see the file getting loaded with ProcessMonitor, but still the error occurred.
Loading up OllyDbg, and tracing through the app's execution, I can see that there's a reference to msi.dll loading immediately prior to a "Module Not Found" exception occurring. This suggested to me that perhaps the issue stemmed from Windows Installer API calls failing for some reason when checking the associated component's keypath, and thus erroring out due to the API return code. To test this, I installed cleanly on a machine and used Windows Installer Cleanup to remove the MSI registration information, and indeed this produced a very similar error.
Rather than continue down the path of debugging and dismantling context.msi, I ran through the AppV sequencer, and this appeared to handle the case correctly. Based on information out in the field with other normal deployment problems related to Frontpage and Sharepoint Designer (both versions 2003 - 2007) I would expect that Frontpage would experience the same type of issue.