Adding a license file to your InstallShield project is very easy. You just need to be aware of the different places in the IDE where you can work with those files.
After you create a project, you will probably start in the Project Assistant. Just go to the Installation Interview tab and answer Yes to the question, "Do you want to display a license agreement dialog?" You then need to browse to the license file. This file generally needs to be an RTF file.
When you add the license file to your Basic MSI project through the Project Assistant, it will likely be put in the AllOtherFiles component. In an InstallScript project, it may be put in the Files Component. Look around and see the name of the component in your particular project. Just remember, it will not be put in the component for the Assembly, but rather in the "All Other Files" type of component.
After the license file has been added, there is another place where you can change it out, if you so desire. In a Basic MSI project, under User Interface, go to the Dialogs view. Then, expand the node for the License Agreement dialog in the middle pane, and click on English. When you do this, you will see the English version of the dialog. When you click on the Memo Scrollable Text control, look in the Properties list and you will see the File Name property. This is the path to your license file.
In an InstallScript project, finding the license agreement dialog is a little different. Under Behavior and Logic, go to the InstallScript view. In the OnFirstUIBefore event handler, scroll to the Dlg_SdLicense2 label, and find the call to SdLicense2Rtf. The path to the license file will be held in the szLicenseFile variable. But where should be file be? Go to the Behavior and Logic group, click on the Support Files/Billboards view, and click on Language Independent. Your Licsense.rtf file should be there.
That's all there is to it.