Hello,
Please see the attached screenshots. If you have set the INSTANCENAME compiler variable in the "Include Script Compiler Variable Configuration" (in our test it is set to "YadaYadaInstance") then this value will be passed via the command line to the original "SQLEXPR_x86_ENU.exe" Microsoft SQL installer. And that Microsoft installer creates the instance, not SetupBuilder. Your SetupBuilder installer only calls the original redistributable which then handles the SQL install.
Just for fun, when you start the "SQLEXPR_x86_ENU.exe" from the command line with the required parameters, does it create your instance or not?
The SetupBuilder include script is nothing more than a "wrapper" around the original redistributable. It embeds the redistributable(s) into the setup.exe and unpacks it at runtime to call it with the required parameter(s).
Friedrich